What Does Claims Department Mean?
The claims department at an insurance company is the section that manages the settling and adjusting of claims. This department is an essential part of any insurance company’s operations and is one of its core functions.
A well-run claims department is key to any profitable and well-run insurance company. Some activities they are responsible for include:
Receiving notice of claim from insureds.
Adjusting and evaluating whether a loss is covered or not.
Determining the amount of money or other compensation to be paid to the insured for insured losses.
Investigating claims to determine whether fraud has occurred.
- Other tasks involving the handling and processes of claims received.
Most claims departments will employ several types of employees. Some are responsible for paperwork, receiving notices of claim, and other administrative duties. But where the rubber really hits the road in claims departments is with the adjusters.
Claims adjusters are the people responsible for determining whether a claim is covered and how much to pay. Adjusters can be in-house (employed by the insurer) or independent adjusters that are contracted by insurance companies to adjust complex claims or losses in remote areas.
A well-run claims department that is effective at detecting insurance fraud and accurately applying the policy coverages will help insurers generate an underwriting profit, meaning more money is collected in premiums than paid out in claims.
Overall, the claims department plays a crucial role in the profitability of the entire enterprise.