The loss adjustment function of a car insurance company refers to all the processes relating to the administrative function of claims – this will include the following processes:

• Claims processing
• Claims management
• Claims settlement

The loss adjustment function is of particular importance in car insurance as the image that the company presents to the public is very dependent on how effectively and efficiently the insurer handles claims. In car insurance the handling of claims can be rather complicated, much more than in life assurance where everything is clear-cut. The insurance company must investigate car insurance claims, especially since fraudulent claims have increased considerably.

The insurance company’s objective is to settle claim with speed and fairness. This is important to promote the image of the company whilst it must guard against unnecessary losses and fraudulent claims to protect its bottom line profit. Car insurance companies need to remain profitable to survive in a tough economy such as we are experiencing at present.

The assessment of claims form part of the management function and a decision must be made as to whether a claim will be met or declined. Once the decision is made that the claim is valid, payment will take place; this is called the claim settlement.