Claims Procedure


By Tarran Dookie


Notification of the Claim

The insured must inform the insurer of any event, which could give rise to a

claim. This must be done as soon as possible. Generally this would mean as

soon as is reasonably practicable. Insurers do not define what is ‘soon as

reasonably practicable’ and a claim denied on the grounds of being reported

too late, may ultimately end up in the courts unless resolved otherwise. The

wise approach is for the insured to report the claim in the earliest possible



Where the insured uses a broker, this information is given to the broker who

would pass on the information to the insurer and generally assist the insured

by negotiating and following up with the insurer.


Usually the insured is required to complete a claim form. This would include

matters such as date and time of loss, circumstances surrounding the loss,

statements from witnesses if relevant, and details of the loss suffered. Most

policies have a prescribed time (usually 30 days) within which details of the

claims must be submitted. If more time is needed, a written request should

must be made.


With respect to liability policies (e.g. public liability, products liability and

workmen’s compensation) it is important that the insurer be informed of any

event likely to give rise to a claim. There have been many cases of persons

who suffered a seemingly minor injury that later turned out into a major

claim. All incidents must be reported even if they appear to be insignificant.


Investigation and payment

The insurer may investigate the claim by using their own in-house personnel

or appoint independent loss adjusters. The insurer will ensure that:

a. Cover was in force at the time of the loss.

b. The peril or contingency is covered by the policy.

c. Reasonable steps were taken to minimize the loss.

d. Conditions have been complied with.

e. No exceptions are appropriate.

f. The insured’s estimate of the loss is reasonable.


Minimising the loss

It is a policy condition that upon the occurrence of an event that causes a

loss that is covered under the policy, the insured takes all reasonable steps to

minimise the loss, and prevent further damage or worsening of the situation.

In other words, the insured must act as if he was uninsured. The

insurer/adjuster should be kept informed of the situation.


Ex-gratia payments

These may be are made where there is no legal obligation on the insurer to

pay. The loss may not be covered under the policy. While ex-gratia

payments may sometimes be made out of sympathy, more often they are

made upon commercial considerations (the customer has a considerable

amount of business with the insurer or the customer’s broker makes out a

case on behalf of his client).


Resolution of disputes

Disputes may relate to whether or not the insurer is liable (a dispute as to

liability) or the amount payable by the insurer ( a dispute as to quantum).

Disputes may be resolved by one of the following methods:


1. Negotiation

This is the preferred method. The matter is discussed and perhaps after

compromises, an amicable settlement or conclusion is reached.

2. Arbitration

The arbitration condition on policies may stipulate that the dispute be

referred to an arbitrator or arbitrators. Some policies (particularly motor and

liability) stipulate that all disputes must be referred to arbitration, whereas

other policies state that only disputes as to quantum must be referred to

arbitration. The insured is not free to disregard arbitration and adopt

litigation.  The insured can  still take the matter to Court if dissatisfied with the arbitration award but a

judge would not set aside an arbitration award without good reason.

(Arbitration is usually speedier and less costly than litigation.)


3. Litigation

Where the parties cannot negotiate a settlement and arbitration is

unsatisfactory or inconclusive, the matter may end up in the Courts.

Litigation can be costly and time-consuming and should only be treated as a

last resort.


4. Alternative dispute resolution

This is a rather recent development that is growing in importance. It is

similar to arbitration but it is voluntary. A resolution or settlement is not

imposed but rather it is suggested by the third party chosen to intervene.