APEX COURT RECENT JUDGMENT ON RELEVANCE OF SURVEY REPORT
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Sampath
Jun 27, 2009, 11:32:04 AM6/27/09
to Insurance surveyors
Dear (s)
Quite frequently the Supreme Court shakes what otherwise are
fundamental beliefs. Insurance is one field where lot of things are
perceived to be sacrosant and have been followed without proper
explanations.
Insurers regularly have the habit of stating "without prejudice" in
all communiations without reconciling whether such statement is
definitely required and would be a legal remedy for some of their
actions.
Here is a recent judgment of Supreme Court which stated that though
losses are to be compulsorily surveyed, the report of the Surveyor
need not be binding on the Insurers or the Insured. This should
provoke Insurers and Surveyors in some manner.
Here is an article written by me and posted in our internal system
"Empower" to which all employees have access. Please go through this
and let me have your opinion
With regards
S Sampathkumar.
+++++++++++++++++++++++++++++++++++++++++
ASSESSMENT OF LOSS – CLAIM SETTLEMENT AND RELEVANCE OF SURVEY REPORT
Insurance Companies for ages have fairly established procedure. The
items insured and claimed for, are varied and will include
Automobiles, Buildings, machinery, stocks of various commodities and
the like. Whenever a loss is reported, a Loss adjuster (Surveyor as he
is popularly known in India) is deputed who assesses the loss and
issues Report known as Survey Report which forms the basis of
consideration or otherwise of the claim. Surveyors are independent
professionals who assess the loss or damage and serve as a link
between the insurer and the insured. They play a very crucial role
between the insured and the Insurer. In India, the surveyors are
licensed and procedurally regulated by IRDA. The surveyors have to
satisfy the requirements of Sec 64UM of Insurance Rules 1939 read with
section 42D of the Act and rule 56A. In general they are to posses
technical qualifications as specified by the Authority, undergo
practical training, apply and hold the licence.
The Insurance Regulatory Authority IRDA formulated Insurance Surveyors
& Loss Assessors (Licencing, Professional Requirements and Code of
Conduct) Regulations, 2000) which regulate the licensing and the work
of surveyors. These regulations stipulate that the surveyor shall
investigate, manage, quantify, validate and deal with losses arising
from any contingency and carry out the work with competence,
objectivity and professional integrity by strictly adhering to the
code of conduct expected of them. Some of the duties and
responsibilities of them are :
Declaring whether he has any interest in the subject matter in
question and whether the loss pertains to any of his relatives,
business partners or through material shareholding.
Maintaining confidentiality and neutrality without jeopardising the
liability of the insurer and claim of the insured;
conducting inspection and re‐inspection of the property in question
suffering a loss;
examining, inquiring, investigating, verifying and checking upon the
causes and the circumstances of the loss in question including extent
of loss, nature of ownership and insurable interest;
estimating, measuring and determining the quantum and description of
the subject under loss;
commenting on the admissibility of the loss as also observance of
warranty conditions under the policy contract;
assessing liability under the Policy, recommending applicability of
depreciation, commenting on salvage and its disposal etc.,
Surveyors are required to submit their report as expeditiously as
possible, but not later than 30 days of their appointment.
2
In a recent ruling, the Apex Court held that the compensation fixed by
the Surveyor deputed is not binding on the Claimants or the Insurance
Companies. Quite often Courts have interpreted the Policy and its
conditions in favour of the complainants and some times pass
strictures also. In a path breaking judgment recently , the Apex Court
chided the Insurers for spending public money unnecessarily. This
assumes significance as in most cases the compensation as spelt out in
the Survey Report forms the basis of the settlement made by the
Insurers.
Here is something from the pronouncement by the Supreme Court of India
in Civil Appeal no. 3253 of 2002 .
The facts of the case are that by special leave, New India challenged
the order passed by the National Consumer Disputes Redressal
Commission dismissing the revision petition filed against the earlier
order. The District Forum, Uttarkashi had directed the Insurers to pay
a sum of Rs.158409/‐ along with interest at the rate of 12% per annum
to the respondent Pradeep Kumar in a claim for damages to the Open
body truck insured with New India. The truck loaded with potatoes met
with an accident in Sept 1998 and had fallen down into khud 300 ft
below the road. The Insured had filed the petition before the Forum
citing deficiency in service by the Insurers.
The Insurers had the vehicle surveyed by Manoj Kumar ( spot survey)
and upon submission of repair estimates by Vivek Arora. Not satisfied
with the report of Vivek Arora, the vehicle was surveyed again by
another approved surveyor B.B. Garg who estimated the damages at Rs.
63,771/‐. The claim was accordingly approved but the Insured refused
to accept this amount and took to Forum. The District Forum held that
there was deficiency in service and ordered them to pay Rs.158409/‐
along with interest at the rate of 12% p.a. with cost of Rs.1000/‐ The
Insurers appealed without avail in the State Commission. The
concurrent order was challenged in National Commission where also they
failed. In the Apex court, the Counsel for Insurers heavily relied
upon Sec 64 UM (2) of the Insurance Act 1938 that the loss assessed by
the approved surveyors appointed in view of the provisions of Section
64‐UM was binding, more so, in the absence of any evidence on record
to establish that the loss assessed by the approved surveyors was not
correct and justified. There were other grounds such as repairs
conducted prior to approval and that Insurers are not liable to
indemnity for new parts.
The impugned section reads that “ No claim in respect of a loss which
has occurred in India and requiring to be paid or settled in India
equal to or exceeding twenty thousand rupees in value on any policy of
insurance, arising or intimated to an insurer at any time after the
expiry of a period of one year from the commencement of the Insurance
(Amendment) Act, 1968, shall, unless otherwise directed by the
Authority, be admitted for payment or settled by the insurer unless he
has obtained a report on the loss that has occurred, from a person who
holds a license issued under this section to act as a surveyor.
3
The Act further states “ Provided that nothing in this sub‐section
shall be deemed to take away or abridge the right of the insurer to
pay or settle any claim at any amount different from the amount
assessed by the approved surveyor or loss assessor.ʺ The accident
itself was not disputed and vehicle had indeed suffered damages. The
surveyors had affirmed that the damages were in conformity with the
description of the accident mentioned in the claim form. The spot
survey report was not filed and some strong remarks were made on this.
As against estimate of Rs.166580/‐, Vivek Arora assessed the loss at
Rs.59304/‐ and the assessment of BB Garg was marginally more.
The Court observed that the object of the proviso is that the claim in
respect of loss required to be paid by the insurer is Rs.20,000/‐ or
more, the loss must first be assessed by an approved surveyor ( or
loss assessor) before it is admitted for payment or settlement by the
insurer. However, the Insurer may settle the claim at any amount or
pay the insured any amount different from the amount assessed by the
approved surveyor. In other words although the assessment of loss by
the approved surveyor is a pre‐requisite for payment or settlement of
claim of twenty thousand rupees or more by insurer, but surveyorʹs
report is not the last and final word. It is not that sacrosanct that
it cannot be departed from; it is not conclusive. The approved
surveyorʹs report may be basis or foundation for settlement of a claim
by the insurer in respect of the loss suffered by the insured but
surely such report is neither binding upon the insurer nor insured.
The Court concluded that the claim of the complainant had been
accepted by the Consumer Fora as duly supported by original vouchers,
bills and
receipts. Taking into consideration such expenses as also the interest
the complainant had to pay to the bank from which the loan was
obtained, the Dist forum awarded Rs.158409/‐ alongwith interest. The
Court observed that the Insurers had not objected to the interest paid
by the complainant to the bank being awarded and had not raised this
issue before the National Commission.
The Apex Court upheld the earlier decision of the Commission and
stated that the present appeal was devoid of any substance and went on
record that Insurance Company would have been well advised in not
spending public money on avoidable and wholly frivolous litigation.
Stating thus Honble Judges DK Jain & RM Lodha dismissed the appeal. As
has been there are lessons to be learnt and this judgment has thrown
open some new perspectives, especially for the Insurers. Look forward
to your feedback…..
With regards
S Sampathkumar
Head Claims (SME)
E: s.sampa...@royalsundaram.in
Quite frequently the Supreme Court shakes what otherwise are
fundamental beliefs. Insurance is one field where lot of things are
perceived to be sacrosant and have been followed without proper
explanations.
Insurers regularly have the habit of stating "without prejudice" in
all communiations without reconciling whether such statement is
definitely required and would be a legal remedy for some of their
actions.
Here is a recent judgment of Supreme Court which stated that though
losses are to be compulsorily surveyed, the report of the Surveyor
need not be binding on the Insurers or the Insured. This should
provoke Insurers and Surveyors in some manner.
Here is an article written by me and posted in our internal system
"Empower" to which all employees have access. Please go through this
and let me have your opinion
With regards
S Sampathkumar.
+++++++++++++++++++++++++++++++++++++++++
ASSESSMENT OF LOSS – CLAIM SETTLEMENT AND RELEVANCE OF SURVEY REPORT
Insurance Companies for ages have fairly established procedure. The
items insured and claimed for, are varied and will include
Automobiles, Buildings, machinery, stocks of various commodities and
the like. Whenever a loss is reported, a Loss adjuster (Surveyor as he
is popularly known in India) is deputed who assesses the loss and
issues Report known as Survey Report which forms the basis of
consideration or otherwise of the claim. Surveyors are independent
professionals who assess the loss or damage and serve as a link
between the insurer and the insured. They play a very crucial role
between the insured and the Insurer. In India, the surveyors are
licensed and procedurally regulated by IRDA. The surveyors have to
satisfy the requirements of Sec 64UM of Insurance Rules 1939 read with
section 42D of the Act and rule 56A. In general they are to posses
technical qualifications as specified by the Authority, undergo
practical training, apply and hold the licence.
The Insurance Regulatory Authority IRDA formulated Insurance Surveyors
& Loss Assessors (Licencing, Professional Requirements and Code of
Conduct) Regulations, 2000) which regulate the licensing and the work
of surveyors. These regulations stipulate that the surveyor shall
investigate, manage, quantify, validate and deal with losses arising
from any contingency and carry out the work with competence,
objectivity and professional integrity by strictly adhering to the
code of conduct expected of them. Some of the duties and
responsibilities of them are :
Declaring whether he has any interest in the subject matter in
question and whether the loss pertains to any of his relatives,
business partners or through material shareholding.
Maintaining confidentiality and neutrality without jeopardising the
liability of the insurer and claim of the insured;
conducting inspection and re‐inspection of the property in question
suffering a loss;
examining, inquiring, investigating, verifying and checking upon the
causes and the circumstances of the loss in question including extent
of loss, nature of ownership and insurable interest;
estimating, measuring and determining the quantum and description of
the subject under loss;
commenting on the admissibility of the loss as also observance of
warranty conditions under the policy contract;
assessing liability under the Policy, recommending applicability of
depreciation, commenting on salvage and its disposal etc.,
Surveyors are required to submit their report as expeditiously as
possible, but not later than 30 days of their appointment.
2
In a recent ruling, the Apex Court held that the compensation fixed by
the Surveyor deputed is not binding on the Claimants or the Insurance
Companies. Quite often Courts have interpreted the Policy and its
conditions in favour of the complainants and some times pass
strictures also. In a path breaking judgment recently , the Apex Court
chided the Insurers for spending public money unnecessarily. This
assumes significance as in most cases the compensation as spelt out in
the Survey Report forms the basis of the settlement made by the
Insurers.
Here is something from the pronouncement by the Supreme Court of India
in Civil Appeal no. 3253 of 2002 .
The facts of the case are that by special leave, New India challenged
the order passed by the National Consumer Disputes Redressal
Commission dismissing the revision petition filed against the earlier
order. The District Forum, Uttarkashi had directed the Insurers to pay
a sum of Rs.158409/‐ along with interest at the rate of 12% per annum
to the respondent Pradeep Kumar in a claim for damages to the Open
body truck insured with New India. The truck loaded with potatoes met
with an accident in Sept 1998 and had fallen down into khud 300 ft
below the road. The Insured had filed the petition before the Forum
citing deficiency in service by the Insurers.
The Insurers had the vehicle surveyed by Manoj Kumar ( spot survey)
and upon submission of repair estimates by Vivek Arora. Not satisfied
with the report of Vivek Arora, the vehicle was surveyed again by
another approved surveyor B.B. Garg who estimated the damages at Rs.
63,771/‐. The claim was accordingly approved but the Insured refused
to accept this amount and took to Forum. The District Forum held that
there was deficiency in service and ordered them to pay Rs.158409/‐
along with interest at the rate of 12% p.a. with cost of Rs.1000/‐ The
Insurers appealed without avail in the State Commission. The
concurrent order was challenged in National Commission where also they
failed. In the Apex court, the Counsel for Insurers heavily relied
upon Sec 64 UM (2) of the Insurance Act 1938 that the loss assessed by
the approved surveyors appointed in view of the provisions of Section
64‐UM was binding, more so, in the absence of any evidence on record
to establish that the loss assessed by the approved surveyors was not
correct and justified. There were other grounds such as repairs
conducted prior to approval and that Insurers are not liable to
indemnity for new parts.
The impugned section reads that “ No claim in respect of a loss which
has occurred in India and requiring to be paid or settled in India
equal to or exceeding twenty thousand rupees in value on any policy of
insurance, arising or intimated to an insurer at any time after the
expiry of a period of one year from the commencement of the Insurance
(Amendment) Act, 1968, shall, unless otherwise directed by the
Authority, be admitted for payment or settled by the insurer unless he
has obtained a report on the loss that has occurred, from a person who
holds a license issued under this section to act as a surveyor.
3
The Act further states “ Provided that nothing in this sub‐section
shall be deemed to take away or abridge the right of the insurer to
pay or settle any claim at any amount different from the amount
assessed by the approved surveyor or loss assessor.ʺ The accident
itself was not disputed and vehicle had indeed suffered damages. The
surveyors had affirmed that the damages were in conformity with the
description of the accident mentioned in the claim form. The spot
survey report was not filed and some strong remarks were made on this.
As against estimate of Rs.166580/‐, Vivek Arora assessed the loss at
Rs.59304/‐ and the assessment of BB Garg was marginally more.
The Court observed that the object of the proviso is that the claim in
respect of loss required to be paid by the insurer is Rs.20,000/‐ or
more, the loss must first be assessed by an approved surveyor ( or
loss assessor) before it is admitted for payment or settlement by the
insurer. However, the Insurer may settle the claim at any amount or
pay the insured any amount different from the amount assessed by the
approved surveyor. In other words although the assessment of loss by
the approved surveyor is a pre‐requisite for payment or settlement of
claim of twenty thousand rupees or more by insurer, but surveyorʹs
report is not the last and final word. It is not that sacrosanct that
it cannot be departed from; it is not conclusive. The approved
surveyorʹs report may be basis or foundation for settlement of a claim
by the insurer in respect of the loss suffered by the insured but
surely such report is neither binding upon the insurer nor insured.
The Court concluded that the claim of the complainant had been
accepted by the Consumer Fora as duly supported by original vouchers,
bills and
receipts. Taking into consideration such expenses as also the interest
the complainant had to pay to the bank from which the loan was
obtained, the Dist forum awarded Rs.158409/‐ alongwith interest. The
Court observed that the Insurers had not objected to the interest paid
by the complainant to the bank being awarded and had not raised this
issue before the National Commission.
The Apex Court upheld the earlier decision of the Commission and
stated that the present appeal was devoid of any substance and went on
record that Insurance Company would have been well advised in not
spending public money on avoidable and wholly frivolous litigation.
Stating thus Honble Judges DK Jain & RM Lodha dismissed the appeal. As
has been there are lessons to be learnt and this judgment has thrown
open some new perspectives, especially for the Insurers. Look forward
to your feedback…..
With regards
S Sampathkumar
Head Claims (SME)
E: s.sampa...@royalsundaram.in
Sanjay Shaw
Jun 28, 2009, 12:08:33 AM6/28/09
to insurance...@googlegroups.com, s.sampa...@royalsundaram.in, gicouncil
Dear Mr Sampath,
We want to develop a domain like www.ombudsman.valuedata.org
We are looking for some Insurance personel who can upload the ombudsman verdict scaned images time to time in the database of above site, as insurer are having GI council Ombudsman periodicals.
We think it will help us for all insurance professional to search the database categorically.
awaiting for response and obliged
with regards
Sanjay Shaw
98310 85519
Sampath
Jun 28, 2009, 9:03:49 AM6/28/09
to Insurance surveyors
Dear Sanjay
Though I would happily accept such assignments, most of the references
do pertain to Health and Motor to lesser extent. I have not had
access to most of them thus far and presently in my role not in a
position to do this.
Thank you
With regards
S Sampathkumar
> ...
>
> read more »- Hide quoted text -
>
> - Show quoted text -
Though I would happily accept such assignments, most of the references
do pertain to Health and Motor to lesser extent. I have not had
access to most of them thus far and presently in my role not in a
position to do this.
Thank you
With regards
S Sampathkumar
>
> read more »- Hide quoted text -
>
> - Show quoted text -
sanjeev agarwal
Feb 26, 2010, 9:20:07 AM2/26/10
to insurance...@googlegroups.com
| are you at kolkata (Sanjeev Agrawal)
Jabalpur --- On Sun, 6/28/09, Sanjay Shaw <sksha...@gmail.com> wrote: |
|
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