Surveyor conduct: inducement, conflict of interest and reporting
You are an IRDAI-licensed surveyor and loss assessor appointed by an insurer to assess a fire claim at a textile mill. The claim is ₹1.8 crore. During your visit, the mill’s director offers to pay you a ‘professional fee’ of ₹2 lakh directly, in addition to the insurer’s fee, if you recommend the full claim without applying depreciation. He also says his brother-in-law owns the repair firm that will carry out the reinstatement. You notice that the mill’s fire safety system was not maintained and that a previous claim was settled six months ago for a similar incident. The insurer’s appointed investigator is a friend of the director.
1. What regulatory and ethical issues arise from these facts?
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The offer of a direct fee from the insured raises an independence issue. A surveyor is appointed by the insurer and must act independently; accepting remuneration from the insured for a favourable recommendation creates a conflict of interest and may breach the code of conduct under the IRDAI surveyor regulations. Recommending the full claim without depreciation when depreciation is due would be a false or misleading assessment. The director’s brother-in-law owning the repair firm creates a potential conflict in the repair estimate, because the estimate may be inflated. The previous similar claim is a moral hazard indicator that requires examination, not automatic suspicion. The investigator’s friendship with the director is a separate independence concern that should be disclosed to the insurer. The surveyor must also maintain confidentiality and report only to the appointing insurer.
2. How should you respond to the director’s offer and the conflict of interest?
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Decline the offer clearly and immediately, and do not accept any payment from the insured. Record the offer in your file, including the date, the persons present and the amount. Inform the insurer’s claims manager in writing, because the offer may affect the insurer’s fraud assessment. Disclose the repair-firm relationship and the investigator’s friendship to the insurer. If the conflict cannot be managed, request that the insurer appoint another surveyor for the repair estimate or for the whole claim. Continue to assess the loss on the evidence, not on the director’s request. Do not negotiate the claim with the insured or promise a settlement; the surveyor’s role is to recommend, and the insurer decides.
3. What should your report to the insurer contain?
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The report should set out the appointment, the scope, the documents examined and the persons interviewed. It should quantify the loss item by item, show the depreciation calculation and explain why depreciation is or is not applicable. It should record the fire safety deficiencies, the previous claim and the repair-firm relationship as risk observations, not as conclusions of fraud. It should state that a direct fee was offered and declined, and that the insurer was informed. It should include photographs, invoices, repair estimates, the fire brigade report and the policy extracts relied on. It should recommend further investigation if the moral hazard indicators remain unexplained. Finally, it should be signed and dated, and submitted within the timeline required by the insurer and the regulations.