Skip to content

Banking and Insurance - Laws and Practice · Functions in Insurance and Compliance related thereto (Part V)

Claims Management and Settlement in Insurance

Updated 11 October 2026 · Fact-checked

Claims management is the process by which an insurer receives intimation of a loss, appoints a licensed surveyor where needed, assesses the loss, and then settles or repudiates the claim within the time limits set by IRDAI regulations. Section 64UM of the Insurance Act, 1938 governs surveyors and loss assessors.

Understand Claims Management and Settlement

An insurance policy is a promise. The claim is the moment the insurer keeps or breaks it. Claims management is the set of steps from the insured telling the insurer about a loss to the insurer paying, or refusing with reasons.

The usual path is: intimation of the loss, registration of the claim, documentation by the insured, survey and assessment (mainly in general insurance), decision and then settlement (payment) or repudiation (rejection). In life insurance a death claim relies on documents such as the death certificate and claim form. In general insurance, such as fire, marine or motor, a surveyor usually inspects the loss.

The Insurance Act, 1938 deals with the surveyor in Section 64UM. A person can act as a surveyor or loss assessor in general insurance only if he meets the qualifications specified in the regulations and is a member of the professional body named in the section, the Indian Institute of Insurance Surveyors and Loss Assessors. For a firm or company, every partner or director, or other person who may be called upon to survey or assess a loss, must meet these requirements.

The section also fixes when a survey report is compulsory. For a loss in India, payable or settled in India, of an amount equal to or above the amount specified in the regulations, the insurer cannot admit or settle the claim unless it has a report from an approved surveyor or loss assessor. The insurer is still free to pay or settle at an amount different from the assessed figure. The surveyor advises. The insurer decides.

The exact time limits for acknowledging, surveying, settling and paying claims sit in IRDAI regulations on policyholders' protection, not in the Act. Check the current regulations in your study material and learn the periods as given there. In an answer, always link the facts to the stage of the process, the legal rule and the conclusion.

Key rules to remember

Who may act as surveyor or loss assessor (Section 64UM(1))
Qualifications specified by regulations + membership of the Indian Institute of Insurance Surveyors and Loss Assessors
Both conditions must be met. For a firm or company, all partners, directors or persons who may survey or assess must meet them.
Compulsory survey report (Section 64UM(4))
Loss in India, payable in India, ≥ amount specified in regulations → no admission or settlement without an approved surveyor's report
The Authority may direct otherwise. The threshold figure comes from the regulations, so do not quote a number from memory unless your study material gives it.
Insurer's freedom (proviso to Section 64UM(4))
Insurer may pay or settle at an amount different from the surveyor's assessed amount
The report is mandatory to obtain, but not binding on the insurer.
Fee to surveyors (Section 64UM(7))
Fee for surveying, verifying or reporting on a claim only to an approved surveyor or loss assessor
Applies after one year from the commencement of the Insurance Laws (Amendment) Act, 2015.
Small claims (Section 64UM(8))
Claim < specified amount and an approved surveyor is impracticable without disproportionate expense → insurer may employ another person not disqualified
The insurer may pay such reasonable fee as it thinks fit.
Authority's powers (Section 64UM(5), (6), (9))
Authority may call for an independent report from another approved surveyor and direct settlement at a lower or higher figure
The insurer bears the cost of the independent report and must comply with the directions. Subsection (9) lets the Authority order a report even on a smaller claim.
Exemption (Section 64UM(10))
Authority may by order exempt a class of claims
Where it is customary to use a person other than a licensed surveyor, or a survey is not practicable.

How to solve Claims Management and Settlement questions

Use this order for any claims question, whether it is a case study, a short note or a compliance question.

  1. 1Identify the class of insurance: life or general. This decides whether a survey is relevant.
  2. 2List the facts in time order: date of loss, date of intimation, documents given, survey, decision.
  3. 3State the legal rule: Section 64UM for surveyors, and the IRDAI regulations for timelines. Do not give a section or period you are unsure of.
  4. 4Check the surveyor's status: qualification, membership of the Indian Institute of Insurance Surveyors and Loss Assessors, and whether the claim amount makes a report compulsory.
  5. 5Apply the rule to the facts. Note whether the insurer may differ from the surveyor's figure, and whether the Authority can call for an independent report.
  6. 6Check the decision: settlement or repudiation, with written reasons, and whether the time limits were met.
  7. 7Conclude clearly and add the compliance step, such as recording reasons, informing the insured, or the remedy of complaint to the Authority or Ombudsman.

Quickest way: Four-question check for claims cases

When to use it: Use it when you have little time and the question is a short fact pattern about a general insurance claim.

  1. Is the surveyor approved (qualified and a member of the professional body)?
  2. Is the claim at or above the specified amount? If yes, a report is needed before admission or settlement.
  3. Does the insurer have to follow the report exactly? No, it may settle at a different amount.
  4. Did the insurer meet the regulatory time limits and give reasons if it rejected? If not, the Authority can direct and the insured can complain.

Common mistakes in Claims Management and Settlement

  • Saying the surveyor's report binds the insurer.

    Students see that a report is compulsory and assume it is final.

    Fix: Quote the proviso to Section 64UM(4): the insurer may pay or settle at a different amount.

  • Quoting a fixed rupee threshold for a compulsory survey.

    Students remember a figure from older material or other sources.

    Fix: Say the amount is the one specified in the regulations, and give a number only if your current study material states it.

  • Placing the claim time limits in the Insurance Act, 1938.

    Students mix the Act with IRDAI regulations.

    Fix: Say that Section 64UM covers surveyors, while timelines come from IRDAI policyholder protection regulations.

  • Forgetting that a firm's or company's partners and directors must be qualified.

    Students read only the main clause of Section 64UM(1).

    Fix: Add the proviso: all partners, directors or persons who may be called upon to survey must satisfy both conditions.

  • Treating a small claim as free of any control.

    Students read Section 64UM(8) alone.

    Fix: Add Section 64UM(9): the Authority may direct that even a smaller claim be reported on by an approved surveyor.

  • Answering with only definitions and no conclusion.

    Students treat it as a theory topic.

    Fix: Use provision, analysis of the facts, conclusion, and end with a compliance step.

Worked examples

Example 1

Surya General Insurance Ltd. receives a claim for a fire loss at a factory in Pune. The loss is above the amount specified in the regulations. The insurer wants to settle on the basis of its own officer's inspection note. Advise.

Show the solution
  1. Provision: under Section 64UM(4), a claim for a loss in India, payable in India, equal to or above the specified amount cannot be admitted or settled unless the insurer has a report from an approved surveyor or loss assessor.
  2. Facts: the loss is above the specified amount and the only assessment is an internal officer's note. The officer is not shown to be an approved surveyor.
  3. Under Section 64UM(7), the insurer cannot pay a fee for surveying or reporting on a claim to anyone who is not an approved surveyor.
  4. Conclusion: the insurer must first obtain a report from an approved surveyor or loss assessor before admitting or settling the claim.

Answer: Surya General Insurance cannot settle on the officer's note. It must obtain an approved surveyor's report first, and it may then settle at an amount different from the surveyor's figure if it wishes.

Example 2

A surveyor's report assesses a motor loss at ₹4,80,000. The insurer settles at ₹4,50,000. The insured says the insurer must pay exactly ₹4,80,000. Is the insured right?

Show the solution
  1. Provision: the proviso to Section 64UM(4) says nothing in the sub-section takes away the insurer's right to pay or settle at an amount different from the amount assessed by the approved surveyor.
  2. Facts: the insurer chose ₹4,50,000, which is ₹30,000 less than the assessment (₹4,80,000 − ₹4,50,000 = ₹30,000).
  3. Analysis: the report is mandatory to obtain, but it is not binding on the amount of settlement.
  4. Limit: the Authority may call for an independent report under Section 64UM(5) and direct the settlement at a higher or lower figure under Section 64UM(6), and the insurer must comply.
  5. Conclusion: the insured is not right on the basis of the report alone. The insured can complain to the Authority, which may direct a different figure.

Answer: No. The insurer may settle at a different amount from the surveyor's assessment. The insured's remedy is to approach the Authority, which can call for an independent report and issue binding directions.

Exam tips

  • Write Section 64UM sub-section numbers only for rules you are sure of: (1) eligibility, (4) compulsory report, (7) fees, (8) small claims, (10) exemptions.
  • Keep the Act separate from IRDAI regulations. Cite the Act for surveyors and the regulations for timelines.
  • In case-based questions, follow provision, analysis, conclusion. Close with a compliance point such as documenting reasons for repudiation.
  • Remember the balance: the report is compulsory but not binding, and the Authority can override the insurer's figure.
  • Do not quote threshold amounts or day-counts unless your current study material gives them.

Practice questions from Functions in Insurance and Compliance related thereto (Part V)

Claims Management and Settlement in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Claims Management and Settlement: frequently asked questions

Is a surveyor always needed for a general insurance claim?

No. Under Section 64UM(4), a report is compulsory for claims at or above the amount specified in the regulations. For smaller claims, the insurer may use another person under Section 64UM(8), but the Authority can still direct a survey under Section 64UM(9).

Who can act as a surveyor or loss assessor?

A person with the qualifications specified in the regulations who is a member of the Indian Institute of Insurance Surveyors and Loss Assessors. For a firm or company, all partners, directors or persons who may survey must meet these conditions.

Can an insurer pay less than the surveyor's assessment?

Yes. The proviso to Section 64UM(4) keeps the insurer's right to settle at a different amount. The Authority can still call for another report and direct a different figure.

Where do claim settlement timelines come from?

They come from IRDAI regulations on protection of policyholders' interests, not from Section 64UM. Learn the periods as given in your current study material.