Marine Claims Handling from the Insurers’ Perspective

11/12/2024

Read time: 6 minutes

Category: Blog

Author: Reetta Lajunen

In high-volume claims handling like motor claims, AI is all the rage. Generative AI reads and interprets documents and, increasingly, the entire process is automated. When it comes to marine claims, it’s inevitable that there will be an AI component too. Tech-savvy insurers already harness its potential for undisputed lower value cargo claims based on bills of lading, packing lists, invoices and the facts about the loss. But major and complex claims need to be handled by people with people, as I will demonstrate.

Collaboration and communication are key to effective and efficient claims handling. To improve collaboration and communication, surveyors and other interested parties could benefit from a greater understanding of the challenges and issues faced by insurance companies and their claims handlers. Having worked in insurance myself, I’d like to zoom in on what drives them.

Internal and External Pressure

Claims handlers in particular are under internal and external pressure when dealing with claims. They need to base their coverage decisions on terms and conditions. This ensures equal treatment of insureds and contributes to the quality of underwriting data, based on which risks are priced. Quality control and peer reviews, random checks and claims committees mean there’s no longer any room for manoeuvring.

External pressure not only comes from claimants and insureds, but is also exerted by authorities. Compliance with increasingly strict and extensive regulations attaches immense importance to proof and documentation. Without exhaustive and correct documentation, claims cannot be paid.

Claims Handling Fundamentals

Across all insurance lines these claims handling fundamentals apply:

providing proof of the damage and loss, for which the burden usually lies with the claimant
identifying the nature, cause and extent of the loss, the reserve and the potential for salvage, e.g. if the cargo is not a total loss
early rejection if the claim has no merit
securing evidence, such as witness statements, logs and recordings at the earliest stage, as evidence like CCTV images may be deleted and people’s memories become increasingly unreliable as time goes by
informing and involving the relevant parties, and arranging joint inspections
collecting the relevant documents, including guarantee letters
mapping and documenting the loss, focussing on analysing the root cause, and assessing potential third party liability for recovery purposes

Driving Claims Handling Efficiency

In major and complex losses in particular, claims handlers are not the only chef in the kitchen. Technical experts, brokers, lawyers, local correspondents and business interruption experts, to name but a few, are sharing the stage. And behind them, claims handlers are dealing with co-insurers and claims lead reinsurers. Suffice to say that the involvement of so many different interested parties vastly complicates communication.

Asymmetric information adds to the complexity. Different parties have different levels of knowledge on different aspects and they may not be aware of the need to inform others. The insurer is in the know when it comes to what’s covered. And while communicating bad news is difficult, managing expectations concerning the scope of coverage will save a lot of time and effort. Clear instructions to surveyors, lawyers and technical experts too will increase claims handling efficiency.

Increasingly, the claims handler takes on the role of project manager, driving collaboration and communication to accelerate the claims handling process. Because, as a rule of thumb, the longer it takes to handle a claim, the higher the claims costs. And though technology may take on some of the administrative burden, when it comes to dealing with major and complex marine claims, people will continue to take center stage.