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📋 '''Claims management policy''' is a formal governance document that establishes the principles, procedures, and standards an [[Definition:Insurance carrier | insurance carrier]] or [[Definition:Managing general agent (MGA) | MGA]] must follow when handling, investigating, reserving, and settling insurance claims. Unlike ad hoc claims handling practices, a codified policy ensures consistency across adjusters, offices, and lines of business — providing a single reference point that aligns operational behavior with regulatory expectations and the organization's risk appetite. In jurisdictions such as the United Kingdom, the Financial Conduct Authority expects firms to maintain documented claims policies as part of broader [[Definition:Conduct risk | conduct risk]] obligations, while in the United States, state insurance departments impose [[Definition:Unfair claims settlement practices | unfair claims settlement practices]] statutes that effectively mandate many of the same disciplines.

⚙️ A well-constructed claims management policy typically covers the end-to-end lifecycle: first notice of loss intake, triage and assignment rules, [[Definition:Loss reserving | reserving]] protocols, investigation standards, authority limits for settlement approvals, [[Definition:Subrogation | subrogation]] and recovery procedures, [[Definition:Litigation management | litigation management]] guidelines, and escalation paths for large or complex losses. It also defines service-level targets — such as acknowledgment timeframes and payment turnaround — that feed into [[Definition:Key performance indicator (KPI) | key performance indicators]] monitored by senior management and boards. Where [[Definition:Delegated underwriting authority (DUA) | delegated authority]] arrangements exist, the policy extends to [[Definition:Third-party administrator (TPA) | third-party administrators]] and coverholders, often requiring periodic [[Definition:Claims audit | claims audits]] to verify compliance. Under frameworks like [[Definition:Solvency II | Solvency II]], the policy must integrate with the insurer's wider [[Definition:System of governance | system of governance]], and under [[Definition:IFRS 17 | IFRS 17]], reserving components of the policy interact directly with financial reporting requirements for the [[Definition:Liability for incurred claims (LIC) | liability for incurred claims]].

🔑 Getting claims management right is arguably the single most consequential operational challenge for any insurer, because the claims function is where the promise embedded in every [[Definition:Insurance policy | insurance policy]] is either honored or broken. A robust policy reduces [[Definition:Leakage | leakage]], mitigates regulatory and legal exposure, and drives fairer outcomes for [[Definition:Policyholder | policyholders]] — all of which protect the insurer's reputation and [[Definition:Loss ratio | loss ratio]]. In markets with increasingly assertive regulators, such as Hong Kong's Insurance Authority and the European Insurance and Occupational Pensions Authority, demonstrating a clear, enforced claims management policy has become a baseline expectation during supervisory reviews. For [[Definition:Insurtech | insurtech]] firms automating parts of the claims journey through [[Definition:Artificial intelligence (AI) | AI]] or [[Definition:Straight-through processing (STP) | straight-through processing]], the policy also serves as the governance guardrail that ensures algorithmic decisions remain compliant and fair.

'''Related concepts:'''
{{Div col|colwidth=20em}}
* [[Definition:Claims handling]]
* [[Definition:Loss reserving]]
* [[Definition:Third-party administrator (TPA)]]
* [[Definition:Unfair claims settlement practices]]
* [[Definition:Claims audit]]
* [[Definition:Conduct risk]]
{{Div col end}}

Definition:Claims management policy - Revision history

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