A claim is the formal demand for policy benefits when a covered event causes financial loss, liability, or health-related expense under a policy.
Claims workflow
The life cycle is usually:
- Notice of the event,
- Documentation and investigation,
- Coverage review,
- Adjustment and reserve setting,
- Settlement and payment.
Why underwriting uses claims
Each claim outcome feeds pricing and product design. High-frequency or severe claims may change rates, exclusions, deductibles, or underwriting requirements.
Scenario
Two claim events happen in the same year: one small property damage claim and one major liability claim. The insurer separates them by severity but combines reporting patterns into portfolio-level claims statistics used for future underwriting decisions.