Claim Settlement Ratio of Life Insurance Companies in India

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The IRDAI (Insurance Regulatory and Development Authority of India) publishes the claim settlement details of all the 24 life insurance companies in India on a yearly basis. The report includes the accurate figures and percentages of the number of claims made by policyholders, the number of claims that were settled, and the number of claims that were rejected.

The claim settlement ratio is the ratio of the number of claims settled to the number of claims made.

Claim settlement ratio = Number of claims settled/Number of claims made*100

Claims may be rejected by life insurance companies for various reasons such as misrepresentation of facts, fraud, impersonation, etc. It is hence important to ensure that you provide accurate information to the insurer at the time of purchase.

Claim settlement ratio for 2016-17

The overall claim settlement ratio for the life insurance sector for the year 2016-17 is 97.74%. The ratio for the private life insurance sector alone is equal to 93.72%. The highest claim settlement ratio is of the public insurance company LIC at 98.31%. The report published by IRDAI also revealed that the total benefit amount for the year 2016-17 is Rs.13,850.62 crore.

The table below presents the claim settlement data for individual death claims for the year 2016-17 in order of highest claim settlement ratio.

Points to note

• The claim settlement ratio should not be the only factor to consider when choosing a life insurance company.
• The ratio is a percentage in totality for all plan types - term plans, endowment plans, ULIPs, and so on. The report does not lay any specifications about the claim settlement for each of the plan types.
• The ratio for each company may vary each year. Hence it may not be wise to choose a life insurance company solely because of the claim settlement ratio.
• Individuals who wish to buy a life insurance policy should look at the features and benefits of the product as well as the kind of services provided by the company.
• Though the claim settlement ratio is an important factor since it tells the common man about the number of claims that have been paid, section 45 of the Insurance Act protects the policyholder from being questioned by the insurer after completion of 2 policy years, unless the policyholder, at the time of inception, was aware that he/she is falsely representing facts.