This article explores conflict of interest issues for marine surveyors/ Loss Assessors when instructed on a marine hull or cargo incident.
The Insurance Regulatory and Development Authority of India (IRDAI) Regulations on Surveyors and Loss Assessors need to be revisited in the context of the duties and responsibilities of a surveyor and loss assessor when involved in marine cargo and hull claims.
The relevant extract of Regulation 13 of IRDAI (Insurance Surveyors and Loss Assessors) Regulations, 2015 (as amended) is reproduced below:
Regulation 13
DUTIES AND RESPONSIBILITIES OF A SURVEYOR AND LOSS ASSESSOR
(c) maintaining confidentiality and neutrality without jeopardising the liability of the insurer and claim of the insured;
(h) advising the insurer and the insured about loss minimisation, loss control, security and safety measures, wherever appropriate, to avoid further losses;
(i) Commenting on the admissibility of the claim and assessing the liability of the insurer as per the policy terms and conditions. contract;
(j) surveying and assessing the loss on behalf of insurer or insured;
(o) giving reasons for repudiation of claim, in case the claim is not covered by policy terms and conditions
IRDAI Regulations requiring surveyors to advise on loss assessment and admissibility (including repudiation) of Insurance claims – Creates a Conflict of Interest – Is detrimental to the growth of professional insurance claims handling in Indian Insurance Industry- Reasons are as follows:
The duties and responsibilities as set-out in Regulation 13 (i) and 13 (o) is in direct contravention with Regulation 13 (c) which is guided by confidentiality and neutrality. In other words, Duties enshrined in Regulation 13 (c) overrides Regulation 13(i) and 13 (o).
A marine surveyors/Loss Assessors issuing a report on Nature, Extent and Causation of damage to Cargo/Hull are within their domain expertise and the relevant IRDA regulations. As per Regulation 13 (c), they are expected to maintain confidentiality and neutrality without jeopardising the liability of
the insurer.
When they enter the realm of advising on merits of insurance claims (including repudiation) under the insurance policy, the surveyor assumes the role of Judge, Jury and Executioner for the assured!!!. The surveyor is shedding the neutrality and confidentiality as expected in 13(c) when the surveyor is
required to advice on the admissibility of claim and give reasons for repudiating the claim. The advice of the surveyor under Regulation 13 (i) and 13 (o) prejudices the rights of the insured and the assured. The surveyor is appointed by the insurance company and their services are paid by the insurance company. The dual role of the surveyor is not a common practice and creates a conflict ofinterest.
From the assured perspective, how can the assured expect the surveyor to remain neutral and maintain confidentiality when the surveyor/loss assessor required to advise on the grounds of repudiation of the policy when regulation 13 (c) requires the surveyor/loss assessor to maintain neutrality. Neutrality of the surveyor can be achieved only when the surveyor does not advise on the merits of the insurance claim as it prejudices the rights of the Assured and Insured. To this extant the
regulations need to be amended.
The domino effects are evident as follows:
i. Insurance companies have relegated insurance claims advisory to surveyors apart from damage assessment/causation.
ii. Insurance Companies are reluctant in developing quality claims handling capacity within the organisation.
iii. The talent pool within the country for insurance claims handling is neither nurtured nor developed!!!
Surveyors are under pressure as they wear multiple hats!!!. The less I say on this, the better!!! The ultimate loser is the Assured. Whoever cared for them!!!.. The Assured are expected to be grateful for paying the premiums!!! and not for professional and timely claims redressal!!!
The only remedy – IRDAI needs to amend the relevant regulation doing away with the requirement of Surveyors advising on the merits of insurance claims.
Allow surveyors to do what they know best – To conduct and issue an Impartial Survey reports on nature, extent of damage and causation for marine hull/cargo!!
Un-burden the surveyor, let the Insurer make their own decisions and more importantly, be fair to the Assured!!!!
