Delay factors in processing the marine policy claims subject to English law settlement

Abstract

Marine insurance is an important component of international trade and commerce, and it is subjected to international regulations in every stage of operation. The aim of this study is to propose an innovative approach in marine insurance claim management process in reducing the time to compensate the insurer based on the international marine insurance policy. The objectives of this study are: to review the existing marine insurance policy claim management process under marine insurance law, to assess the current constraints in marine insurance in using “Pay to be paid” rule by studying the previous cases in marine insurance claims, to propose a new claim management process in marine insurance to reduce the time to compensate the insurer. Six industry experts were interviewed as well as a survey of 300 respondents, comprised 150 from general insurance and 150 from marine experts, were conducted in identifying the potential problems behind the delay in marine insurance claim management. The respondents came from different backgrounds, working in insurance related areas as well as ordinary people who have insurance plans. The results were analyzed using the Delphi method which consists of 10 items, scored on a Five-point Likert response scale. The results showed that the major delay in claim process is due to redundant documentations. To address the issue of the redundant documentations as well as to shorten the claim settlement process, a 5-step Lean Management System (LMS) was proposed. The LMS proposes the five important steps to improve claim efficiency: i. identify customers, ii. identify value stream, iii. eliminate waste, iv. respond to customer pull, and v. pursue perfection. By implementing the Lean Management System in marine insurance world, it is hoped that the advancement of insurance claim management and process, and a correlation between the after-effects can be benefited to many parties in shipping industry.