Operational and Actuarial Aspects of Takaful Claims Management

Sub Topics Importance of Good Claims Management Family Takaful General Takaful Third Party Claims Assistance Claims Disputes

Importance A claim can be defined as a ‘request for reimbursement filed by the insured and addressed to the operator’ Claim is the ultimate test of responsibility of the takaful operator to compensate the economic loss of the participant as promptly and fairly as possible Usually administered by the insurer’s claims department, however it may also involve adjusters, and third party administrators

Importance Need to be efficient and effective as it has marketing repercussions. Good claim services contributes to good image and better competitive position Claims processing differ according to: a. type of cover, b. the amount of claim, and c. whether it is a personal or commercial claim; Takaful operators have the right to safeguard its role as the trustee of the takaful fund by ensuring that all claims are genuine

Regulations General Takaful – JPIT3 Family Takaful - No specific guideline but embedded in prudential risk management framework and product guidelines and circular Guidelines on claims settlement practices aim to: a. improve claims processing, b. fraud control and c. risk management measures.

Claims Processing – In General General procedure for claim applicable to all classes of family and general takaful plans : Check the policy or certificate Notify the takaful operator Provide complete and correct information Keep copies of all documents Communicate frequently

Family Takaful Claims Death claims: Proof of death Proof of age Proof of title and ownership

Family Takaful Claims Maturity claims To settle a maturity claim, a participant is usually required to provide the following proof of claims: If the participant is the insured - Proof of age - Proof of survival - The original policy certificate - Completed discharge voucher If the participant is not the insured - a deed of assignment - a statement by the insured proving that he/she is alive and is unable or not available to sign the survival certificate

Family Takaful Claims For endowment policies, operators would normally incorporate common settlement options such as: Cash proceeds Conversion to annuity Leave maturity proceeds to the operator Personal Accident, Sickness or Disability Benefit Claims For the above stated claims, the participant must prove to the satisfaction of the operator and comply with all other conditions of the contract ; for personal accident policies the doctorine of proximate cause is important;

Family Takaful Claims It is customery for operators to issue form so as to elicit information about the accidents and validation of all the documents given ; among the documents required for personal accident claims includes : Medical leave chit Medical report Salary slip Photographs depicting injury sustained

General Takaful Claims The general procedures for claim applicable to all classes of general takaful plan is as follows : Notice of claim Make a police report Proof of loss Investigation Settlement of a claim

General Takaful Claims The general procedures for claim applicable to all classes of general takaful plan is as follows : Notice of claim Make a police report Proof of loss Investigation Settlement of a claim

General Motor Takaful Claims Claims under motor takaful may arise under: Own Damage Claims Partial Loss Total Loss Theft Windscreen Lialbility to Third Party Damage to property belonging to third party Death and/ or bodily injury to third party

General Motor Takaful Claims Processing of claims for Partial/Total Loss Documents to be submitted are: Claim form Police report Estimate of repairs Copies of identification card and driving license Copies of the registration card and road tax of the vehicle

General Motor Takaful Claims Appointment of adjuster Approval Reinspection Discharge Payment

General Motor Takaful Claims Processing of Claims for windscreen - claim form - Copy of the participant’s identification card; - Photographs of the damaged windscreen; - The bill for replacement of the damaged windscreen

General Motor Takaful Claims Third Party - operator liable only to indemnify against liability to third party ; - liability to third party should be viewed strictly from the provision of the law; - offer for settlement made directly to claimant; - proper discharge must be obtained from the claimant ; - liability of the participant can only be determined by the court ; - panel lawyers can be appointed if deemed necessary

Loss Adjusters Investigates and evaluates damages independently Assess liability and quantum payable by the takaful operator Communicating with participants, claimants, beneficiaries, public authorities and others such as witnesses. Negotiate with contractors on time and cost of repairs for the purpose of making an offer of settlement to the participant. Protect the interest of the takaful fund when dealing with claimants

Claims Dispute When a dispute arises, it may be resolved through the following channels : Negotiation – ex gratia Litigation Arbitration Mediation Financial Mediation Bureau