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

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, investigates it, assesses the amount payable under the policy and settles or repudiates the claim. For large general insurance losses, Section 64UM requires a report from an approved surveyor or loss assessor before settlement.

Understand Claims Management and Settlement

A claim is the policyholder's demand that the insurer pay under the contract after an insured event. The insurer's whole promise is to pay claims. So claims handling is where the contract is actually tested.

The process runs in a fixed order. First is intimation: the insured or nominee informs the insurer, usually promptly, as the policy requires. Next is documentation: claim form, proof of loss, police or hospital records as relevant. Then investigation and assessment: the insurer checks that the policy was in force, the peril was covered, no exclusion applies and the facts are true. Last is decision and payment: the insurer settles in full or part, or repudiates with written reasons.

In general insurance, assessing the loss often needs an expert. This is the role of the surveyor or loss assessor. Under Section 64UM, a person cannot act as a surveyor or loss assessor in general insurance unless he has the academic qualifications specified by the regulations and is a member of the Indian Institute of Insurance Surveyors and Loss Assessors. In a firm or company, every partner, director or other person who may be called upon to survey or assess a loss must meet both conditions.

The Act ties the surveyor to the claim amount. For a loss in India, payable in India, at or above the amount specified in the regulations, the insurer must not admit or settle the claim without a report from an approved surveyor or loss assessor. The insurer is still free to pay a different amount from the one assessed. The surveyor advises. The insurer decides.

The regulator keeps oversight. The Authority can call for an independent report from another approved surveyor, at the insurer's cost, and can direct the insurer how to settle. For timelines, remember that the specific periods for settlement are set by IRDAI regulations on protection of policyholders' interests. Check the current regulation text, as figures change.

Key rules to remember

Surveyor eligibility (Section 64UM(1))
Approved surveyor = specified academic qualification + membership of the Indian Institute of Insurance Surveyors and Loss Assessors
Both conditions are required. For a firm or company, every partner, director or person who may survey or assess must satisfy both.
Mandatory survey (Section 64UM(4))
Loss in India, payable in India, ≥ amount specified by the Authority → report from approved surveyor needed before admitting or settling
The threshold is set in the regulations. Do not quote a figure unless you are sure of it. The Authority can direct otherwise.
Insurer's freedom (proviso to 64UM(4))
Insurer may pay or settle at an amount different from the surveyor's assessment
The report is mandatory input, not a binding figure.
Authority's independent report (Section 64UM(5) and (6))
Authority calls for report from another approved surveyor → cost borne by insurer → Authority may direct settlement at a lower or higher figure
The insurer must comply. If the direction lowers an amount already paid, the insurer complies by taking all reasonable steps to recover, with regard to cost. No lower sum is directed where recovery would cause undue hardship to the insured and the amount has been paid.
Small claims (Section 64UM(8) and (9))
Claim < specified amount → insurer may use another person if an approved surveyor would cost disproportionately
That person must not be disqualified. The Authority may still direct a report by an approved surveyor, and then sub-sections (5) and (6) apply.
Fee bar (Section 64UM(7))
No fee for surveying, verifying or reporting on a claim unless the person is an approved surveyor or loss assessor
Section 64UM(8) is the exception for small claims.
No compensation (Section 110D)
No right to compensation for loss caused by compliance with an order or direction given under the Act
Protects insurers who comply with directions. It also covers losses from operation of Sections 34, 34A, 34E and 37A.

How to solve Claims Management and Settlement questions

Use this method for any case-based question on a claim. Move from facts to law to conclusion.

  1. 1Identify the type of insurance (life, health, motor, fire, marine) and the stage the claim has reached: intimation, survey, assessment or settlement.
  2. 2Check the basics: was the policy in force, was the premium paid, was the event within the cover, and does any exclusion or condition apply?
  3. 3Check whether a survey is needed. Is it a general insurance loss in India payable in India, and is the amount at or above the regulatory threshold? If yes, an approved surveyor's report is required under Section 64UM(4).
  4. 4Test the surveyor: does the person hold the specified qualification and membership of the Indian Institute of Insurance Surveyors and Loss Assessors? For a firm, test every partner or director who may survey.
  5. 5Apply the insurer's powers and limits: it may settle at a different figure, but the Authority can call for an independent report and direct settlement.
  6. 6Add the timeline and compliance point: settle or repudiate within the period set by the IRDAI regulations, give written reasons for repudiation, and keep records.
  7. 7State the conclusion clearly and advise the practical step, such as appointing an approved surveyor or informing the Authority.

Quickest way: Four-question claim check

When to use it: When a case question gives a long fact pattern and you have limited time.

  1. Ask 1: Is the claim valid on policy terms (in force, covered, no exclusion)?
  2. Ask 2: Is it general insurance with a loss at or above the threshold? If yes, a Section 64UM(4) surveyor's report is needed.
  3. Ask 3: Is the surveyor approved (qualification plus Institute membership)? Is any fee paid to an unapproved person? That breaches Section 64UM(7), unless the small-claim exception in 64UM(8) applies.
  4. Ask 4: Has the settlement period been met, and can the Authority direct otherwise? Write the conclusion in one line.

Common mistakes in Claims Management and Settlement

  • Saying the insurer must pay exactly the surveyor's assessed amount.

    Students treat the survey report as binding.

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

  • Saying every claim needs an approved surveyor.

    Students ignore the threshold in the regulations.

    Fix: The mandatory requirement applies to claims at or above the specified amount. Small claims fall under Section 64UM(8) and (9).

  • Stating that only the surveyor's academic qualification matters.

    Clause (b) is forgotten.

    Fix: Write both limbs: specified qualification and membership of the Indian Institute of Insurance Surveyors and Loss Assessors.

  • Applying Section 64UM to life insurance claims.

    The word 'claims' is read generally.

    Fix: Section 64UM speaks of surveyors and loss assessors in general insurance business. Life claims involve documents and investigation, not loss assessment.

  • Quoting settlement timelines from memory with exact days.

    Students mix up figures across regulations and years.

    Fix: Say the periods are set by IRDAI policyholder protection regulations. Give a number only when you are sure of the current text.

  • Forgetting who pays for the Authority's independent report.

    Sub-section (5) is read quickly.

    Fix: The insurer bears the cost of, or incidental to, the report.

Worked examples

Example 1

A general insurer receives a fire loss claim in India, payable in India, above the amount specified in the regulations. It wants to settle on the basis of its own officer's internal estimate and pays the officer a fee. Advise the insurer.

Show the solution
  1. Provision: Section 64UM(4) bars admitting or settling a claim at or above the specified amount without a report from an approved surveyor or loss assessor.
  2. Facts: the loss is in India, payable in India, and above the threshold. An internal estimate is not an approved surveyor's report.
  3. Fee point: Section 64UM(7) bars a fee for surveying or reporting unless the person is an approved surveyor or loss assessor. The small-claim exception in Section 64UM(8) does not apply, as the claim is large.
  4. Conclusion: the insurer must obtain a report from an approved surveyor. It may then settle at a different amount if it records reasons.

Answer: The insurer cannot settle on the internal estimate. It must appoint an approved surveyor or loss assessor. It may pay a different figure afterwards, but it must not pay survey fees to an unapproved person.

Example 2

Surveyor Mehta Associates, a firm, is appointed to assess a large motor claim. Partner Rao holds the specified qualification and is a member of the Indian Institute of Insurance Surveyors and Loss Assessors. Partner Iyer, who may be called upon to inspect losses, holds the qualification but is not a member. Can the firm act?

Show the solution
  1. Provision: Section 64UM(1) requires qualification and membership. The proviso says that in a firm all partners who may be called upon to survey must satisfy both.
  2. Facts: Rao satisfies both. Iyer satisfies only the qualification.
  3. Application: Iyer may be called upon to survey, so his non-membership defeats the firm's eligibility.
  4. Conclusion and advice: the firm cannot act until Iyer becomes a member, or the firm ensures only qualified members are called upon to survey, in line with the regulations.

Answer: As matters stand, the firm is not eligible, because Iyer fails clause (b) of Section 64UM(1). The firm should fix Iyer's membership before accepting the assignment.

Exam tips

  • Write the provision, then facts, then conclusion. Cite Section 64UM only for surveyor points.
  • Use the exact terms 'approved surveyor or loss assessor' and 'the Authority'.
  • Do not give a rupee threshold or a day count unless you are certain. Refer to the regulations.
  • Mention the insurer's freedom to settle at a different figure whenever a survey report appears in the facts.
  • End with practical compliance advice, such as recording reasons and informing the policyholder in writing.

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

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

What is the role of a surveyor or loss assessor in claims?

A surveyor or loss assessor inspects the loss and reports its cause and amount to the insurer. Under Section 64UM, a report from an approved surveyor is required before a large general insurance claim is admitted or settled. The insurer still decides the final amount.

Who can act as a surveyor or loss assessor?

A person with the academic qualifications specified by the regulations and membership of the Indian Institute of Insurance Surveyors and Loss Assessors. In a firm or company, every partner, director or person who may survey must meet both conditions.

Can the insurer settle a claim at a different amount from the surveyor's report?

Yes. The proviso to Section 64UM(4) preserves the insurer's right to pay or settle at a different amount. The Authority can still call for an independent report and direct settlement.

What are the claim settlement timelines under IRDAI regulations?

The periods are prescribed in IRDAI regulations on protection of policyholders' interests and differ by class of business and stage. Check the current regulation text before quoting any number. In answers, state that the insurer must act within the prescribed period.

Can the Authority change how a claim is settled?

Yes. Under Section 64UM(5) and (6), the Authority can call for an independent surveyor's report and then direct the insurer to settle at a lower or higher figure. The insurer must comply.