Why a Large Corporate Needs a Claims Governance Committee
A large Indian corporate carries enough insurance, across enough lines and locations, that its claims are a material financial and operational matter, and handling them ad hoc, claim by claim, function by function, leaves money on the table and exposes the company to avoidable disputes. A claims governance committee gives the claims function a structure: a standing forum with defined membership, authority and process that oversees how the company's claims are pursued, escalated, reserved and, where necessary, litigated.
The case for the committee is that a claim, particularly a large or contested one, touches several functions and several kinds of judgement, and no single function has all of them. The risk and insurance team understands the policy and the market. Finance owns the financial impact and the reserving. Legal owns the contractual and litigation position. Operations owns the facts of the loss and the business consequence. A claim handled by the insurance team alone, without finance's view of the reserve or legal's view of the dispute or operations' grasp of the facts, is handled with part of the picture, and large claims handled with part of the picture go wrong: reserves are mis-set, disputes are mishandled, and recoveries are smaller and slower than they should be.
The committee also answers an accountability need. A large corporate's board and audit committee will want assurance that the company's claims, which can run to substantial sums, are being managed competently and consistently, that large claims are being escalated and overseen rather than left to junior handling, and that the reserves carried for open claims are sound. A claims governance committee that meets regularly, oversees the significant claims, reviews the reserves and reports upward gives that assurance and creates the documented governance trail that an audit committee expects.
The committee is not meant to handle every claim. The great majority of a corporate's claims (small motor claims, routine property and health claims) should run through ordinary handling without committee involvement, and a committee that tries to oversee everything will clog and add no value. The committee's job is to govern the framework within which all claims are handled, and to take direct oversight of the claims that matter: the large ones, the contested ones, the ones with reserving uncertainty, the ones heading to litigation. The sections that follow set out who sits on it, how claims reach it, and what it oversees.
Composition and the Roles Around the Table
The committee's value comes from bringing the right functions together, so its composition is the first design decision, and it should be built around the functions a significant claim touches rather than around seniority alone.
The core membership is four functions. Risk and insurance brings the knowledge of the policies, the cover, the market and the claims process, and usually chairs or convenes the committee because claims are its domain. Finance brings ownership of the financial impact, the reserving and the cash-flow consequence, and the reserves the committee reviews are finance's to carry, so finance's presence is not optional. Legal brings the contractual position, the coverage analysis where coverage is contested, and the litigation judgement where a claim or a recovery heads to dispute. Operations (or the relevant business unit) brings the facts of the loss, the business-interruption picture, and the operational consequence, and because operations lived the loss it holds information the other functions need.
Beyond the core, the committee draws in others as the claim requires: the relevant business-unit head for a claim affecting that unit, the company secretary or compliance function for governance matters, and external participants (the broker, and where appropriate external counsel or a forensic accountant) for their specialist input. The committee should be senior enough to make and stand behind decisions about significant sums (a mis-set reserve or a mishandled large claim is a board-level matter), but not so senior that it cannot meet often enough to be useful, so it usually sits at the level of the heads of the relevant functions with escalation to the CFO or the board for the largest matters.
Authority, cadence and the secretariat
The committee needs defined authority: a charter setting out its mandate, its membership, the decisions it can take, the thresholds at which claims come to it, and the matters it escalates to the board or audit committee. Without a charter the committee's role is ambiguous and its decisions are contestable, so the charter is the foundation.
The cadence should match the claims flow: a regular meeting (monthly or quarterly depending on claims volume) to review the open significant claims, the reserves and the MIS, with the ability to convene out of cycle for an urgent large claim. The committee needs a secretariat (usually the risk and insurance function) that maintains the claims register, prepares the papers, records the decisions and tracks the actions, because a committee whose decisions and actions are not recorded and followed up adds governance theatre rather than governance. The minutes and the decision record are also the audit trail the board and the auditors will look to, so the secretariat's discipline is part of the committee's value, not an administrative afterthought.
Claim Thresholds and the Escalation Framework
The mechanism that brings the right claims to the committee, and keeps the routine ones out, is the escalation framework: a set of thresholds and triggers that route a claim to the level of attention it warrants. Getting the thresholds right is what makes the committee useful rather than clogged or absent.
The simplest trigger is quantum. Claims above a defined value come to the committee; claims below it are handled in the ordinary course. The threshold should be set so that the committee sees the claims that are material to the company (a few large claims a year) and not the volume of small ones, which means it depends on the company's size and claims profile and is set in the charter. A tiered structure works well: a lower threshold at which a claim must be notified to the committee and tracked, and a higher threshold at which the committee takes active oversight, so the committee is aware of a wider set of claims than it actively manages.
Quantum alone is not enough, because some claims matter for reasons other than size, so the framework needs qualitative triggers alongside the value thresholds. A claim should escalate regardless of quantum if coverage is disputed (the insurer is questioning whether the loss is covered), if it is heading to litigation or arbitration, if it involves an unusual or precedent-setting issue, if it has reputational or regulatory dimensions, if the reserve is uncertain or moving, or if it is taking unusually long to settle. These triggers catch the claims that need senior attention for reasons the value does not capture, and they should be written into the framework so that escalation is automatic rather than dependent on someone deciding to raise it.
How escalation actually works
The framework has to operate in practice, not just on paper, which means the claims-handling process has to be wired to it. When a claim is intimated and registered, it is assessed against the thresholds and triggers, and one that crosses them is flagged and routed to the committee (immediately for an urgent large claim, or onto the agenda for the next meeting for a notifiable one). The handler cannot simply absorb a claim that should escalate, so the routing has to be built into the workflow and the registration, with the secretariat checking that claims crossing the thresholds are in fact being brought up.
Overseeing Surveyors, Loss Adjusters and Reserving
Two of the committee's most substantive oversight responsibilities are the conduct of the surveyors and loss adjusters who assess the company's claims, and the reserves the company carries for its open claims. Both are areas where competent oversight materially affects the financial outcome.
Surveyor and loss-adjuster oversight
For a property, engineering or marine claim of any size, an IRDAI-licensed surveyor or a loss adjuster assesses the loss, and the surveyor's report drives the settlement, so the surveyor's work is not something the company can treat as the insurer's business alone. The surveyor is appointed in connection with the insurer's settlement, but the assessment determines what the company recovers, and a surveyor who under-assesses the loss, misapplies the policy, disputes items the policy covers or delays the assessment costs the company real money. The committee's role is to oversee the surveyor's engagement on significant claims: to ensure the company engages with the survey process actively (providing the information, documenting the loss, contesting an assessment that is wrong), to track whether the survey is progressing or stalling, and to bring the company's own loss-adjusting or forensic-accounting support to bear on large or contested claims where the surveyor's assessment needs to be challenged. The committee should treat the surveyor's assessment as something to be engaged with and, where necessary, contested on the evidence, not accepted passively.
Reserving review
For each open claim, the company carries a reserve, an estimate of what the claim will ultimately cost or recover, and these reserves matter because they flow into the company's financial position and because a reserve that is wrong (too low and the company is under-provided, too high and it ties up capital and distorts the picture) misleads the company about its own exposure. The committee should review the reserves on significant open claims: whether the reserve reflects the current best estimate, whether it has moved and why, whether the basis is sound, and whether the open claims as a whole are adequately provided. Reserving is partly finance's discipline and partly a claims judgement (what is this claim likely to settle at), and the committee is the forum where the financial and the claims views of the reserve meet, which is why finance and the claims function both need to be at the table when reserves are reviewed.
The reserving review is also where the committee spots trouble early. A reserve that keeps rising signals a claim that is deteriorating; a cluster of reserves moving in one line signals a systemic issue; a long-open claim with an uncertain reserve signals a dispute that may need a different strategy. The committee that reviews reserves regularly sees these signals and can act on them, where a company that revisits a claim's reserve only at settlement learns of the deterioration too late to change the outcome.
Disputed Claims, Litigation Strategy and the Broker's Role
The claims the committee most needs to govern are the contested ones, where the insurer disputes coverage or quantum and the claim may head to litigation or arbitration, because these are the claims with the most at stake and the most need for a coordinated strategy across functions.
Running a disputed claim
When an insurer disputes a claim (denying coverage, applying an exclusion, contesting the quantum, or invoking a condition or warranty) the company faces a decision about how to respond, and that decision needs the committee's combined judgement. Legal assesses the coverage position and the strength of the company's case. The risk and insurance team brings the policy interpretation and the market context (how this wording is generally applied, whether the insurer's position is defensible). Finance weighs the amount at stake against the cost and uncertainty of pursuing it. Operations supplies the facts. From these the committee forms a strategy: whether to accept the insurer's position, to negotiate, to escalate within the insurer, to invoke the policy's dispute-resolution mechanism, or to litigate or arbitrate.
The litigation decision in particular needs the committee's discipline, because litigation is expensive, slow and uncertain, and a large corporate that litigates every disputed claim wastes resources while one that litigates none leaves valid claims unrecovered. The committee should weigh each disputed claim on its merits: the strength of the coverage position, the amount at stake, the cost and time of the dispute, the relationship with the insurer, and the precedent the outcome sets. Where it decides to pursue a dispute, it should run it with a strategy (the forum, the counsel, the evidence, the settlement parameters) rather than drifting into litigation by default, and it should keep the option of settlement open because most disputes settle and a negotiated outcome is often better than a litigated one.
The broker's role
The broker is a participant in the committee's work on significant and disputed claims, because the broker placed the cover, understands the wording and the insurer, and acts as the company's advocate with the insurer. On a disputed claim the broker's role is to press the company's position with the insurer, to bring its market relationship and its knowledge of how the wording should be applied to bear, and to advise the committee on the strength of the company's position and the likely outcome. A good broker adds real value on contested claims, and the committee should use the broker as its advocate and adviser in the market while retaining the decisions itself. The broker's claims-advocacy performance is also something the committee should assess, because a broker that does not fight for the company's claims is not earning its place, and the committee's view of the broker's claims performance should feed into the company's broker selection and remuneration.
The Metrics and MIS the Committee Should Track
A claims governance committee runs on information, and the management information it tracks both drives its meetings and gives the company a view of its claims performance over time, so building the right MIS is a core part of standing the committee up.
The foundation is the claims register: a complete record of the company's claims, with each claim's status, quantum, reserve, age, the surveyor or adjuster involved, and the key events and decisions. The register is the committee's working document, the source of the agenda, and the audit trail of how each significant claim was handled, and it has to be maintained currently by the secretariat, because a stale register makes the committee blind.
From the register, the committee should track a set of metrics that tell it how the company's claims are running:
- Open claims and their reserves, by line and by value band, so the committee sees the total exposure carried in open claims and where it sits, and can spot reserves that are rising or clusters that are moving.
- Claims settlement performance, the time from intimation to settlement and the ratio of settled to claimed amount, by line, so the committee sees how quickly and how fully the company's claims are being settled and whether any line or insurer is settling poorly.
- Surveyor and adjuster performance, how long surveys are taking and how the company's claimed amounts compare to the surveyors' assessments, so the committee sees where assessments are running short and where the survey process is stalling.
- Disputed and litigated claims, the count, the amounts at stake, the status and the outcomes, so the committee sees the company's dispute exposure and how its litigation strategy is faring.
- Recoveries, including subrogation and salvage, so the committee sees whether the company is recovering what it should from third parties and from salvaged property, which is money often left uncollected.
The MIS should also support the upward reporting the board and audit committee expect: a summary of the significant claims, the reserves carried, the disputes in progress and the claims performance, presented at a level the board can absorb, so the committee discharges its assurance role and the board sees that the company's claims are being governed.
The metrics are most useful tracked over time and against benchmarks, because a single period's numbers say little but a trend says a lot: a settlement ratio that is falling, a survey time that is lengthening, a dispute count that is rising all signal problems the committee should act on. A committee that tracks its metrics over time turns its claims data into a management tool, identifying where the company's claims handling, its insurers, its surveyors or its cover need attention, which is the difference between a committee that governs claims and one that merely reviews them.
Governing claims well, the coverage analysis on a disputed claim, the assessment of whether a surveyor has applied the policy correctly, the strength of the company's position in a dispute, rests on knowing precisely what the policy wording provides and how it compares across the market. Sarvada gives commercial insurance brokers and corporate risk and claims teams structured, searchable access to insurer policy wordings, so the committee can check exactly what a cover responds to, how a clause is generally applied, and where the company's wording stands against the market when a claim is contested. Request Access to ground your claims governance in the real terms of the policies the company relies on.