Lodging and settling an insurance claim
When an insured event occurs, the claim moves through three distinct steps — lodge, assess, settle — and no single person controls it end to end. Segregation of duties is enforced by the system, so the same officer can never both raise and pay out a claim. Crucially, a settled claim posts as a real repayment against the loan, not a write-off.
The three-step path
- 1LodgeOne staff member raises the claim against the policy, recording the insured event.
- 2AssessA different staff member verifies the event, the outstanding balance, and the current sum-insured — confirming what is actually payable.
- 3SettleA third staff member settles the claim, and the settlement posts against the loan.
Why three different people
Settlement is not a favour a single officer can grant. Because lodging, assessing and settling are separate steps each owned by a different person, no one can both originate and pay out a claim. The system enforces this segregation rather than leaving it to office etiquette, and it keeps a full audit trail of who lodged, who assessed, and who settled every claim.
A settled claim is a repayment, not a write-off
This is the distinction that matters most for the books. When the insurer pays, that money clears the loan the same way a borrower's payment would — the settlement posts as a real repayment against the balance. Both the borrower's loan and the general ledger reflect the insurer's payment. It is not written off. A write-off recognises a loss the institution absorbs; an insurance settlement is a recovery that actually pays the loan down, with a different GL treatment entirely.
If a loan were simply uncollectable and uninsured, it would go through the write-off path, which posts against the loan-loss provision. A covered loan whose policy pays out avoids that outcome — see how and when a loan is written off for the other side.