New limits for external surveyors may speed up claim settlemets

But insurers must ensure that in-house surveyors are qualified

Car owners may see faster claim settlement with the insurance regulator planning to raise the limits for hiring external insurance surveyors.

The amendments to the Insurance Surveyors and Loss Assessors regulations, issued by the Insurance Regulatory and Development Authority of India (IRDAI) last week, has proposed that the limit for appointing external surveyors be raised to Rs 50,000 for motor claims and Rs 1 lakh for other claims. This means that for settling claims up to these amounts general insurance companies need not appoint an external surveyor. It can be done by an in-house surveyor. 

The earlier limit was Rs 20,000 for all kinds of claims. 

The new rule has both advantages and disadvantages, say experts.

The biggest advantage is that claims can be settled faster. Now there will be no need to wait for the external surveyor to submit his/her report before settling the claim. This used to be a lengthy process. 

According to Chandan Grover, Vice-President, Risk Management and Claims, Prudent Insurance Brokers, the number of claims have been increasing as more customers are buying high-end cars. The older limit meant that in many cases insurance companies had to wait for the external surveyor's assessment before settling the claim, which led to unnecessary delays in settlement. 

"Surveyors are few in number and they are overburdened. Hence, getting an external surveyor's report for settling the claim used to cause delays. Now insurance companies will be able to settle more claims using an in-house surveyor,'' he says.

Since the frequency of claims is higher in case of motor insurance, it makes more sense for insurance companies to appoint surveyors on their payroll, which will ensure faster claim settlement, points out a senior official with a private general insurance company. 

"One reason for the shortage of surveyors is low remuneration. Since the average claim for private vehicles is Rs 25,000, now with the changed rule insurance companies need not depend on external surveyors," he says.

Since issues in case of motor claims are of a single kind, it is easier to find experts who can address them. For instance, an automobile engineer will be able to survey all motor claims. But in case of fire claims, the company may need to appoint different kinds of experts depending on the plant or machinery. That is why for non-motor claims, companies still prefer to rely on external surveyors.

However, as more claims get settled in-house, insurance companies will need to ensure that the in-house surveyors are qualified to carry out the survey. 

"Companies will have to ensure that the surveyors they appoint are competent to negotiate with the workshop for repair costs. If not, the vehicle owner may end up getting over-charged,'' Grover says.

In case the vehicle owner is unhappy with the claim settlement he can request the insurance company to review its decision. If that does not work, he can approach the insurance ombudsman and then Irdai. If the dispute is still not addressed, he can take the legal route by approaching a court of law. 

A customer can also appoint a surveyor at his own expense and the second surveyor's report too is acceptable in the court of law, Grover adds.

But there are very few disputes in case of private vehicles, says the insurance official. "With zero depreciation covers becoming popular, we don't see much disputes in private car claims,'' he says.