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🏗️ '''Claims governance''' encompasses the policies, procedures, organizational structures, oversight mechanisms, and performance standards that an [[Definition:Insurance carrier | insurer]] or [[Definition:Delegated authority | delegated authority]] operation establishes to ensure that [[Definition:Claims | claims]] are handled consistently, fairly, efficiently, and in compliance with contractual, regulatory, and ethical obligations. Far from being a back-office concern, claims governance sits at the heart of an insurer's promise to [[Definition:Policyholder | policyholders]]: the moment a claim is reported is when the [[Definition:Insurance policy | policy]] is tested, and the quality of governance over that process determines whether the organization fulfills its core function. In an industry where claims expenditures represent the largest single cost, governance frameworks directly affect [[Definition:Loss ratio (L/R) | loss ratios]], [[Definition:Reserves | reserve]] adequacy, regulatory standing, and market reputation.

⚙️ Robust claims governance typically operates across several dimensions. Authority frameworks define who can approve settlements, set or change [[Definition:Reserves | reserves]], appoint legal counsel, or authorize coverage denials — with escalation thresholds calibrated by claim size, complexity, or line of business. Standard operating procedures prescribe investigation protocols, documentation requirements for the [[Definition:Claims file | claims file]], communication timelines with claimants and [[Definition:Broker | brokers]], and criteria for referring claims to [[Definition:Special investigation unit (SIU) | special investigation units]] when [[Definition:Insurance fraud | fraud]] is suspected. Management information and [[Definition:Key performance indicator (KPI) | KPIs]] — including average cycle time, [[Definition:Leakage | claims leakage]] rates, reopened-claim frequency, and [[Definition:Customer satisfaction | policyholder satisfaction]] scores — provide oversight bodies with visibility into whether the claims function is performing within acceptable parameters. In [[Definition:Delegated authority | delegated authority]] arrangements, where a [[Definition:Managing general agent (MGA) | MGA]] or [[Definition:Coverholder | coverholder]] handles claims on behalf of a carrier, claims governance also extends to the terms of the [[Definition:Binding authority agreement | binding authority agreement]], the scope of delegated claims authority, and the audit rights retained by the insurer or [[Definition:Lloyd's of London | Lloyd's]] managing agent.

📋 Regulatory expectations around claims governance have intensified across major markets. The UK's [[Definition:Financial Conduct Authority (FCA) | FCA]] has made fair claims handling a supervisory priority, while [[Definition:Solvency II | Solvency II's]] governance requirements compel European insurers to embed claims oversight within their broader risk management systems. In the United States, state insurance regulators evaluate claims practices through [[Definition:Market conduct examination | market conduct examinations]] that can result in fines, corrective action plans, or consent orders. [[Definition:Lloyd's of London | Lloyd's]] has progressively strengthened its claims governance standards for [[Definition:Syndicate | syndicates]] and coverholders, including the oversight role of the Lloyd's Claims Scheme. Across all these regimes, the underlying principle is the same: claims governance is not merely an operational discipline but a fiduciary responsibility, because the way an insurer handles claims ultimately defines the value — or the emptiness — of the [[Definition:Insurance policy | insurance policy]] it sold.

'''Related concepts:'''
{{Div col|colwidth=20em}}
* [[Definition:Claims adjuster]]
* [[Definition:Claims file]]
* [[Definition:Claims leakage]]
* [[Definition:Delegated authority]]
* [[Definition:Special investigation unit (SIU)]]
* [[Definition:Market conduct examination]]
{{Div col end}}

Definition:Claims governance - Revision history

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