Proper underwriting goes a long way to establish and maintain a healthy insurance portfolio. Thereafter, claims must be entertained and influence the loss ratio on an insurance book. The only way to curb and manage claim expenses is through the proper investigation of those claims, to eliminate fraudulent claims, assess the damages and source parts. After this has been done, an effective salvage contract and efficient recovery process is needed to recover additional funds in the insured’s claims account.
Investigation and negotiation
The success of any recovery can be allotted to two aspects: the investigation (75%) and the negotiation (25%). It is of vital importance to initiate the recovery process as soon after the incident, as possible. This improves the possibility of obtaining accurate eye-witness statements, CCTV footage, or presents the opportunity to get information through the investigation of the scene or property involved, substantially. If this opportunity is lost, it can have a huge impact on the successful finalisation of the matter.
The person dealing with the negotiation of the settlement must be familiar with Motor Law, apportionments, various applications of merit, as well as the latest case law and precedent set due to matters settled in court.
A legal motor vehicle recovery or asset recovery would fall within the sphere of Private Law in South Africa. And, ore particular, the Law of Obligations. The Law of Obligations is split into two main fields, namely the Law of Contract and the Law of Delict (or the Law of Tort, as it is known in English Law). We deal with the Law of Delict. Therefore, a delict is a civil wrongdoing aimed at claiming damages and falls under Private Law. In the short term insurance industry, recoveries are mostly dealt with by:
– The risk carrier/insurer, internally;
– Legal counsel; and/or
– Niche recovery agents.
An effective recovery process
An effective recovery process should amount to a 45% success ratio on all recoverable claims (combined against insured, as well as uninsured drivers). At least 75% of the insured recoverable portfolio should be maintained. Keep in mind that not all claims can be recovered 100%, due to apportionment being applied on some merit. This can have a huge impact on the loss ratio. To succeed with a recovery process the following five principles need to be present, to determine negligence and liability:
1. There must have been an act or omission.
2. There must have been damages.
3. The act must have been negligent.
4. The act must have been wrongful. If it happened due
to a sudden emergency, it cannot be seen as wrongful.
5. There must be a link or nexus between the damage
and the act or omission.
It is, therefore, important to determine whether all these principles are present. If one element is not there, the delict cannot be proven, and liability cannot follow. In a normal course, a party wishing to recover from another party bears the onus of proving the elements of the delict as set out above. You cannot, for example,
allege that the other driver changed lanes in front of you, therefore, you rear-ended him. The one who alleges must prove.
The actual investigation
The person dealing with a recovery (usually after the damage claim has been finalised), needs to build the puzzle to establish how the incident occurred. This is done by collecting various components as proof. The best individual/s to provide most of the information will be any person who was involved in the incident and on the scene. This is the best scenario, although it is not always possible due to death, injuries or
Claims technicians can be of great assistance in obtaining as much information possible, on receipt of the claim.
Information that is vital
The following information is of vital importance, and the more information obtained as quickly as possible, the more successful the outcome:
– The names and telephone numbers of all parties involved;
– The make, model and colour of the vehicles involved in the accident;
– The names and contact details of any eyewitnesses at the scene. This can be other drivers also involved in the accident, or innocent bystanders or pedestrians who witnessed the accident;
– A comprehensive statement from both (the insured and the other party) drivers with a sketch, if possible, of how the accident occurred; and
– Mention of any adverse weather conditions. Heavy rain or fog can have a significant influence on the occurrence of an accident.
– Take as many photographs as possible… of the vehicles’ positions after the accident, specific damage tot the vehicles – this can assist with apportionment of damages during negotiation or eliminate claims for non-accident-related damage, any road marks to indicate what happened, for example, skid or brake marks, photos to identify the scene at a later stage, for example, road signs or trees obscuring the view of the driver and photos of the road surface, which might have had an impact on the accident (a pothole could have been the reason for swerving into oncoming traffic;
– Take photos of signage on vehicles, which could assist with identifying the other party; and
– Take all the information from the CCTV cameras covering the
intersection or drive cam footage in one of the vehicles.
The person dealing with the investigation must be able to form a
occurred. This is like building a puzzle, putting all the pieces
together to get the full picture.
Other supporting documents:
- Obtain all quantum documentation;
– A loss adjuster report
– Final tax invoice
– Agreement of loss (in case of a total loss or cash settlement)
– Salvage invoice
– Towing invoice
– Hire vehicle invoice
– Proof of any additional losses, for example, items that are
not covered by insurance but are damaged. A canopy, for
example, that is not specified or insured.
- Obtain the accident report from South African Police Service
(SAPS), or docket, in case of serious injury or death; and
- Any additional expert reports. An accident reconstruction
report or fire expert report, for example.
The negotiation part of the process
During the negotiation part of the recovery process, the following needs to be addressed or considered:
- Apportionment: This refers to the level of negligence allocated to each party (if applicable) considering the specific merit.
- Sudden emergency: This is seen as an act that was both sudden and unexpected. Once again, the one who alleges must prove.
- Proximate cause: The cause having the most significant impact in bringing about the loss, when two or more independent perils operate at the same time (i.e., concurrently) to produce a loss.
- One percent cases: Where only one percent negligence needs to be proved to hold a party liable.
The recovery process can be extremely time-consuming and arduous. Regular follow-ups and being part of the “network” is of utmost importance. The result of getting a regular flow of income due to an efficient process is often the difference between a profit or loss in an insurance book. The bottom-line is to ensure an efficient recovery process to ensure a constant flow of money into the claims account.
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