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  • Claim Settlement Ratio Of Term Insurance Plans Providers

    Life Insurance
    • Premiums as low as Rs.17/day for sum assured of Rs.1 crore*
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    Claim Settlement Ratio of Term Insurance Companies in India

    Buying a term insurance plan is one of the key financial decisions that everyone must make in their lives. When it comes to choosing a term insurance plan, finding the right company from the 24 registered life insurers in India can be a daunting task. Various factors such as policy benefit, customer service quality, claim settlement ratio, etc., must be considered while choosing a company. Though the needs of everyone differ, a decision made based on these factors is likely to help an individual access the best product out there in the market.

    The claim settlement ratio of a life insurance company is one of the major criteria used to ascertain the quality of a company. A good claim settlement ratio is an indicator that the company is financially solid and has the ability to honour the claims made by policyholders. The Insurance Regulatory and Development Authority of India (IRDA) releases the claim settlement ratio data of all life insurance companies in the market every year. Customers looking forward to purchase a new term insurance plan can consider this as a parameter when searching for companies. Before we take a look at the claim settlement ratio of major insurer, let’s understand how it is calculated.

    What is claim settlement ratio?

    Claim settlement ratio refers to the percentage of claims settled by a life insurance company compared to the total number of claims received. This metric is always given in percentage. For instance, if the claim settlement ratio of a company is 95%, it has settled 95 claims out of every 100 claims received. It can be calculated with the help of a simple formula as follows:

    Claim settlement ratio = (No. of claims settled/No. of claims received) * 100

    In the above example, the remaining 5% claims are rejected by the company. An insurer may reject a claim for various reasons including misrepresentation, fraud, impersonation, etc. It should be noted that the details must be filled correctly while filing a claim application. If the details provided are not sufficient, the company may ask the applicant to provide more details.

    The claim settlement ratio of a company often provides a clear idea of the claims settled by it in a fiscal year. However, it should be just one of the factors to be considered while making a decision. Judging a company solely based on its claim settlement ratio is not a good idea. Other factors such as service quality, policy benefits, range of plans, etc., must also be considered while choosing a company.

    IRDA claim settlement ratio of life insurers 2016-17

    The latest data for claim settlement ratio is available till the fiscal year 2016-17. As per the data released by the IRDA, the average claim settlement ratio of life insurance companies currently stands at 97.74% for the fiscal year 2016-17. This is marginally higher than the previous year’s claim settlement ratio of 97.43%.

    India’s state-owned life insurance provider Life Insurance Corporation of India (LIC) is still the top company in the country with an exceptional claim settlement ratio of 98.31% in the fiscal year 2016-17.

    The claim settlement ratio data for top life insurance companies can be listed as follows:

    Claim Settlement Ratio for Individual Policies (2016-17)
    Insurer Death claims received Death claims paid Claims rejected/repudiated Claims written back Claims pending Claim Settlement Ratio (CSR)
    LIC 76,9386 75,6399 7,432 2,352 3,203 98.31%
    Aegon Religare 588 571 17 0 0 97.11%
    Bajaj Allianz 16,239 14,887 932 357 63 91.67%
    Exide Life 2,973 2,866 107 0 0 96.40%
    Kotak Mahindra 2,831 2,583 99 130 19 91.24%
    SBI Life 17,610 17,027 451 0 132 96.69%
    Birla Sunlife 6,048 5,727 240 33 48 94.69%
    HDFC Std 12,725 12,421 244 0 59 97.62%
    Max Life 9,821 9,606 212 0 3 97.81%
    Reliance Life 11,079 10,473 529 42 35 94.53%
    Bharti Axa Life 878 811 33 0 34 92.37%
    ICICI Prulife 10,901 10,539 305 21 36 96.68%
    DHFL Pramerica 471 428 36 1 6 90.87%
    PNB Metlife 3,879 3,380 357 34 108 87.14%
    Canara HSBC 653 620 32 0 1 94.95%
    Shriram Life 2,926 1,859 774 0 293 63.53%
    IDBI Federal Life 1,065 962 96 0 7 90.33%
    India First Life 1,741 1,439 273 0 29 82.65%
    Star Union Daichi 1,473 1,238 200 16 19 84.05%
    Edelweiss Tokio 164 153 11 0 0 93.29%
    Tata AIA Life 2,707 2,599 108 0 0 96.01%
    Future Generali 1,366 1,233 126 0 17 89.53%
    Sahara Life 725 654 45 0 26 90.21%
    Aviva Life 1,245 1,128 110 0 7 90.60%

    Conclusion

    Claim settlement ratio is currently one of the best indicators available for customers to understand the quality of a life insurance company. Ideally, a company with over 80% claim settlement ratio is considered a good one since it has honoured most of its claims. A company might have genuine reasons for rejecting a claim. Hence, it is better to consider other factors too before narrowing down the choices to one specific company. Compare the pros and cons of various company and choose the best one that meets your requirements.

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