What is the function of a claims department?

The function of a claims department is primarily focused on the assessment and payment of claims related to defined economic losses experienced by policyholders due to various covered events. This includes evaluating the legitimacy of the claims submitted, determining the extent of the losses, and ensuring that payments are made according to the terms and conditions stipulated in the insurance policy.

In this context, providing payment for defined economic losses ensures that policyholders receive compensation for the costs that arise as a result of an event that is covered under their insurance policy, such as property damage, medical expenses, or liability claims. This process not only supports the financial stability of the insured but also upholds the integrity and promises of the insurance contract.

While delivering policy documents and managing customer feedback are important functions of an insurance company, they do not primarily encompass the operational duties of a claims department. Providing payment for claims regardless of loss is contrary to the principles of responsible claims handling and risk assessment in the insurance industry. Thus, the focus on defined economic losses highlights the claims department's role in the insurance framework.