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Salvage Management needs to be made a procedure rather than a subject
of choice or will. It needs to be injected into the claims procedure
so as to reap true benefits of the process, as has been done in
developed countries. Leaders of the industry need to support and be a
part of this change and facilitate its implementation into the system.
To increase impact and receptivity, all the people involved in the
claims process need to be communicated and demonstrated the benefits
of new system. The salvage management program needs not be
complicated. To start with, we need to review our claims process.
Inconsistencies, control points, and lost opportunities, if any,
should be identified. Established salvage guidelines need review and
testing against best practices and technologies. The program should
also fit into Adjusters’ working module.
It is to be appreciated that Salvage Management benefits not only the
Insurers but also the Insured. It creates a win-win situation for both
the parties. For example, the brisk salvaging operation after a loss
can help minimize the time required for revival of Insured’s business
after the loss. Similarly, Insured may get discount on standard
insurance premium rate provided they agree beforehand to deal the
salvage, if required, in the most professional way. Alternatively,
Insurers may also offer lower premium rates on property that would
result in better salvage realization. Improved customer loyalty is
another benefit for Insurers as a streamlined and consistent claim
process means that insured gets faster and better service. Therefore,
optimization of salvage recovery benefits not only the Insurers but
also the Insured. The only thing required is the change of approach.
Another important issue experienced by me as a salvage manager is that
salvages, very often are destroyed due to brands & labels and other
clauses or retained by the insured at minimal prices. It is mostly
believed that salvage cannot be sold in such cases. However, this is
not true. For example, a stock of cameras of a reputed company can be
sold after removing or destroying the brands and labels on cameras
despite the insurance policy being subject to Brand & Labels clause.
Some items like pharmaceuticals and medicines etc. are exceptions
where there might be a restriction on sale of such items from the
Government or it might be injurious to General public.
Investing in salvage can lead to much higher returns, but due to
strict cost cutting norms, there is a resistance to this effect. There
are ample examples where an electronic item after being claimed as
fire or water affected is tested and then sold. Similarly, as a
salvage manager, I personally suggested an Insurer to invest around Rs.
1.50 Lacs in drying a water affected fabric lying in Mumbai, resulting
into a salvage recovery 2 times than that was expected out of salvage.
The claim, being large, took 2 months to get settled and had the
Insurers left the fabric in wet condition, they would have ended up
paying for lifting of salvage by junk-dealers. Insurers saved around
Rs. 5 Lacs in this case.
Conclusion:
To improve claims procedure, one thing is for sure that change is
required in the system. We need to make a shift from traditional
approach to the modern and scientific practices. Also we need to
realize that this change is not going to be entirely painless. As
already pointed out, we, especially the industry leaders, need to come
together and do this for the Indian Insurance Industry and I strongly
believe in my decision of adopting Salvage Management as a career for
the rest of my life. |
