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:
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Receiving notice of claim from insureds.
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Adjusting and evaluating whether a loss is covered or not.
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Determining the amount of money or other compensation to be paid to the insured for insured losses.
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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.
Insuranceopedia Explains Claims Department
In the unfortunate situation where an insured has a claim, they would first contact their insurance advisor and then the claims department of their insurance company to report the claim. From there, they will be assigned a claims representative who will collect some basic information and help them file a claim with the insurer.
From there, a wide range of professionals will jump in to assist. The more complicated a claim, the more people will need to get involved. Really complex commercial claims could involve a claims examiner, adjuster, claims trainer, supervisors and managers to help move the claim along and ensure an accurate result.
Their role is to work together to guide the policyholder along the claims process, investigate the claim for legitimacy and the extent of the damage, and eventually approve or deny a claim based on the insured’s claim filing paperwork, their coverage, and other factors.
Claims departments exist in all types of insurance companies from property and casualty insurers to health, life, and group benefits insurers. Aside from the standard technical skills required, they also need to have a high degree of empathy and patience as they guide insureds through an undeniably stressful time in their lives.
The claims department is where insurers honor their obligations and promises laid out in the insurance policy and is key to the insured’s experience working with the insurer. A poorly run claims department can have a negative effect on the brand and reputation of the insurer.