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Claim Settlement Ratio For Life Insurance

The Claim Settlement Ratio is a percentage that represents the ratio of claims paid to customers by an insurance company to the total claims received by that company. Every year, the Insurance Regulatory and Development Authority of India (IRDA) releases the Claim Settlement Ratio for life insurance companies. So, if you want to buy a life insurance plan or renew your existing one, you should always check the CSR of the life insurance company and buy term plan from the highest claim settlement ratio in life insurance company. Let us look at the claim settlement ratio and the claim settlement ratio of life insurance companies in India. 

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What is Claim Settlement Ratio?

Claim Settlement Ratio (CSR) is the percentage of claims an insurer settles in a year out of the total claims. It indicates the credibility of an insurance company and therefore, the highest claim settlement ratio in life insurance is sought as the most trustworthy insurer to buy term plan from. As a simple rule, the higher the CSR, the more reliable the insurance company is.

Claim Settlement Ratio of life insurance companies is a reliable metric to determine if a certain insurer is the right option for you or not. You can easily find the different claim settlement ratio of life insurance companies on the official website of IRDAI (Insurance Regulatory and Development Authority of India). It is suggested that a customer must always buy term plan or life insurance plan from an insurer that has over 95% CSR for at least 5 consecutive years.

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What Are The Claim Settlement Ratio of Life Insurance Companies 2022-23?

As discussed, IRDAI publishes the details of claim settlement ratio of life insurance companies in India on a yearly basis. This report involves the correct figures and percentage of the number of claims made by the life assured, number of claims rejected and number of claims settled.

Let’s take a look at the CSR of different types of life insurance companies as per IRDAI Annual Report. The table below illustrates the life insurance claim settlement ratio for the financial year 2022-2023:

Insurance Provider Life Insurance Claim settlement ratio
Aditya Birla Life Insurance 98.1%
Bandhan Life Insurance 99.4%
Ageas Federal Life Insurance 96.06%
Aviva Life Insurance 98.75%
Bajaj Allianz Life Insurance 99%
Canara HSBC Life Insurance 99%
Edelweiss Tokio Life Insurance 99.2%
Future Generali Life Insurance 95.05%
HDFC Life Insurance 99.4%
ICICI Prudential Life Insurance 95.3%
India First Life Insurance 97.04%
Kotak Life Insurance 98.8%
LIC 98.6%
Max Life Insurance 99.5%
PNB MetLife Insurance 99.1%
Reliance Nippon Life Insurance 98.6%
SBI Life Insurance 95%
Shriram Life Insurance 97.4%
Star UnionLife Insurance 96.07%
Tata AIA Life Insurance 99%

The highest claim settlement ratio in life insurance indicates the insurer's reliability, and that the company can be trusted for availing the best life or term insurance plans. On the other hand, companies with low life insurance claim settlement ratios signify low insurer credibility; therefore, not many customers will buy plans from them because of their inability to settle claims.

After looking at the table, the highest claim settlement ratio in life insurance is for Max Life insurance i.e., 99.5%. The max life claim settlement ratio indicates the fast settlement of claims. 

Overall, the above table listing the life insurance claim settlement ratio of life insurers is good enough to select the best term plan.

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How To Calculate Claim Settlement Ratio of Life Insurance Companies? 

It is important to note that the Claim Settlement Ratio is calculated for all the insurance products collectively offered by the insurance company, not for individual products. 

To illustrate how this ratio is computed, let's take an example to understand the calculation of the CSR: 

 Imagine a life insurance company receives 1,000 claims within a year. Out of these, they approve and pay the term insurance benefit (or sum assured) for 996 claims, while rejecting the remaining 4 claims.

The claim settlement ratio for the insurer would be (996/1000)% or 99.6%. 

The CSR is calculated using the following formula:

CSR = (Total claims settled in 1 year/Total claims in a year) X 100

For instance, if company X has settled 9600 out of 10,000 claims for 2022-23. The CSR will be 96%.

What is a Good Claim Settlement Ratio? 

The higher the % of claims settled, the better the chances that your life insurance claim will be approved and then settled by the insurer. Another important of a high CSR is the finances of an insurer. With a percentage of settlement above 95%, a prospective insurance buyer can be very sure that the company is financially secure. Also, they can pay most of their clients the life insurance claim amount. 

You should also consider various factors like the insurer’s online review, the experience of your family and friends, and the benefits of the life insurance policy before making an informed choice. 

Why Is Claim Settlement Ratio of Life Insurance Companies Important?

The claim settlement ratio of life insurance companies is important because of the following reasons:

  1. Helps financially secure your loved ones

    Life insurance is meant to help your loved ones financially if something unfortunate happens to you. But remember to always choose a life insurance company that has high CSR, preferably above 95%. That way, your family won't have trouble receiving the claim amount in the future.

  2. Indicates reliability of an insurer

    The Claim Settlement Ratio of life insurance companies indicates the ability of a company to pay the sum assured to you or your beneficiary/nominee. If the insurance company has been maintaining high CSR over a substantial time, then they can settle claims quickly.

What Is The Time frame For Receiving Claim Payout? 

The duration in which your beneficiaries get the claim payout depends on how quickly they submit a claim and complete the necessary paperwork. If the information is accurate, an insurance company can process and pay the claim within as short a period as one to two weeks.

Some of the ideal situations are: 

  • The life insurance plan is active for 3 years or more 

  • All premiums paid for the insurance plan 

  • The death's circumstances do not raise suspicion. 

What Are The Steps Involved In Life Insurance Claim Settlement Process?

The claim process follows the death of the policyholder, upon which the nominee/claimant can go ahead and claim the death benefit. Below mentioned are the steps that determine the processing of the claim:

  1. Intimation of Claim

    After the life assured's death, the nominee can initiate the claim process by filling out the Death Claim Form. They can submit it along with ID proof and address proof to the head office, bank branches, nearest offices, or by email. The form is available online on the company's website or offline at branch offices.

  2. Document Submission 

    The nominee/claimant must also provide necessary documents with the form to confirm the information given to the insurance company about the policyholder's death. The following documents should be submitted within the given timeframe:

    Death Types Documents Required
    Mandatory Documents 
    • Original documents of the policy
    • Death Claim Form
    • Canceled Cheque with NEFT details
    • Nominee/Claimant’s ID and Address Proof
    Additional Documents Required: 
    In case of Medical//Natural deaths
    • Consulted Doctor’s Statement 
    • Certificate of hospital treating the deceased policyholder
    • Employer Certificate or Educational Institute Certificate of policyholder
    • Additional treatment/hospital/ records
    In case of accidental/unnatural deaths
    • Police Reports (Panchnama, FIR, Police Investigation Report, Charge sheet)
    • Autopsy/Post Mortem report (PMR) and Viscera Report
  3. Settlement of Claim

    When the insurance company receives all the required documents and forms, the claim starts getting processed. The company will further check and verify the documents in accordance with the requirements, make a decision (subject to T&C), and finally, communicate the same to the nominee/claimant. 

What Are The Types Of Life Insurance Claims?

Below mentioned are the types of claims that can be availed upon buying a life insurance policy:

  1. Death Benefit

    The Death Benefit is the primary type of claim in life or term insurance, offering financial assistance to the policyholder's family upon their untimely demise. It ensures that the surviving family members or nominees of the policyholder can maintain their lifestyles. To receive the assured sum, nominees must make a claim for the death benefits following the policyholder's demise.

  2. Survival Benefits

    Survival benefits (or maturity benefits) are received by the policyholder if he/she outlives the life or term insurance policy period. That is, if the policyholder pays all the premiums on time and completes the policy without any lapse, he/she is eligible for survival/maturity benefits.

  3. Rider Benefits

    If policyholders buy term plan or life insurance plan, and add riders to it, like Accidental Death Rider, Terminal Illness Rider, Waiver of Premium Rider, Critical Illness Rider etc., he/she can claim the rider benefits whenever the situation arises.

What Are The Common Reasons For Rejecting Life Insurance Claims?

Here are some of the most common reasons for rejecting life insurance plans:

  • Mentioning false information or inaccurate information in the application form of a life insurance policy

  • Not paying premium amounts on the due date or during the grace time

  • Causes of Death that are not covered by the insurance plan like suicide before completing 1st policy tenure, and accidental death caused by overconsumption of drugs/alcohol.

  • A falsified claim made by the policy’s beneficiary

What Are Some Points To Consider Checking Life Insurance Claim Settlement Ratio?

Here are some points to consider while checking Life Insurance claim settlement ratio (CSR):

  • Always opt for a life insurance claim settlement ratio (CSR) more than 95% for 5 consecutive years. 

  • Check the claim settlement process and the time taken by the company to settle claims.

  • The higher the life insurance sales, the higher will be the average claim paid value.

Wrapping It Up!

One should always be aware of the highest claim settlement ratio in life insurance while purchasing a term plan. Using an online facility, you can easily avail of a term plan hassle-free. By disclosing details about your medical conditions, earnings, and other information, you will receive a high SA and it becomes easy to process the claims. The rejection of a life insurance plan based on the non-disclosure facts or misrepresentation and fraud has a negative effect on the CSR of an insurance company. In addition, you should consider other important features also in choosing the best term, and plan as per your life goals along with the claim settlement ratio of life insurance companies 2024.

FAQs

  • Q: What does life insurance claim settlement ratio mean?

    Ans: Life insurance claim settlement ratio refers to the ratio of claims registered within the company to the number of claims settled by the company in the specific financial year.
  • Q: Which life insurance company has the highest claim settlement ratio?

    Ans: Max life insurance has the highest claim settlement ratio of life insurance companies in India.
  • Q: What are the top 3 claim settlement ratios of life insurance companies?

    Ans: The top 3 companies with the highest claim settlement ratio in life insurance are Max Life, Bandhan Life, and Bajaj Allianz Life Insurance companies.
  • Q: What is the claim settlement ratio for Max Life Insurance in financial year 2022-23?

    Ans: The life insurance claim settlement ratio of Max Life Insurance in FY 2022-23 is 99.5%.
  • Q: How to calculate the claim settlement ratio of life insurance companies in India?

    Ans: You can calculate the claim settlement ratio of life insurance companies in India by dividing the total claims settled with the total claims received and multiplying the sum by 100.
  • Q: What is Life Insurance Claim Settlement Ratio?

    Ans: Claim Settlement Ratio (CSR) is the percentage of claims an insurance company pays out of the total claims received. It helps gauge an insurer's reliability, with higher ratios indicating better trustworthiness. For best assurance, opt for a company with the highest claim settlement ratio in life insurance.
  • Q: What are the steps involved in the claim settlement process?

    Ans: The claim process involves:
      • Intimating the claim
      • Submitting required documents
      • Claim verification by the insurer
      • Settlement decision and communication

      Choose a company with a high life insurance claim settlement ratio for a smoother process.

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