What Does Claims and Loss Control Mean?
Claims and loss control is a strategy insurers use to reduce the risk of policyholders filing claims and thereby increasing the company's losses. Insurers may require or suggest that policyholders participate in certain activities or do certain things to manage their risk of loss. They often offer incentives for policyholders to follow through on these activities or actions. In this way, the policyholder can benefit from engaging in something that reduces their risk of incurring a loss and earning a side benefit from the insurer, while the latter benefits from reducing the risk of a claim being filed and paying out a benefit.
Insuranceopedia Explains Claims and Loss Control
Depending on the particular type of insurance, an insurer may attempt different claims and loss control strategies. For example, a health insurer may slightly reduce a premium price if a policyholder becomes a member at a gym. This is because the health insurance company may view belonging to a gym as a factor that is likely to improve the policyholder's health. Improved health translates to a reduced risk of claims being filed by the policyholder due to fewer health issues. The fewer claims filed, the higher the profits for the insurer. Therefore, insurers can benefit greatly from implementing claims and loss control, even if they offer monetary incentives to policyholders.