Download the Policybazaar app
to manage all your insurance needs.
IRDA Claim Settlement Ratio
The IRDA claim settlement ratio is defined as the percentage of settled insurance claims by an insurer compared to the total number of received claims in a year. Every year, the Insurance Regulatory and Development Authority of India (IRDAI) releases extensive data for all life insurance companies and their claim settlement ratios.
Get ₹1 Cr. Life Cover at just ₹449/month*
No medical checkup required
Save more with upto 10% discount
Covers COVID-19
Tax Benefit
Upto Rs. 46800
Life Cover Till Age
99 Years
8 Lakh+
Happy Customers
*Tax benefit is subject to changes in tax laws. *Standard T&C Apply
** Discount is offered by the insurance company as approved by IRDAI for the product under File & Use guidelines
- Home
- Life Insurance
- General Info
- Articles - GLI
- IRDA Claim Settlement Ratio
The higher the ratio, the better it is for the insurance company. For instance, if the IRDA claim settlement ratio of an insurance company is 96%, it means that the insurance company has settled, i.e., paid the sum assured to the nominee(s), for 96 claims out of every 100 claims received. This also means that the remaining 4% of insurance claims are repudiated, rejected, unclaimed, or pending by the insurance company on various grounds.
When one purchases a life insurance policy, one should be mindful of the fact that the nominee(s) or beneficiary (ies) should receive the sum assured after the death of the policyholder. After all, in the event of one’s death, the proceeds of the sum assured payment from the insurer shall ensure that the policy holder’s dependents have sufficient corpus to be financially secure.
But what will happen if the insurer doesn't settle the nominee's claim? It is therefore important to understand which insurance company maintains a satisfactory track record in settling death claims. IRDA claim settlement ratio is a key factor to consider while evaluating a life insurance policy as it reflects the reliability of claims’ resolution by a life insurance company. A comparison of the IRDA claim settlement ratios of different insurance companies will go a long way in helping to choose a life insurance policy.
FAQ's
-
Q1. How is the IRDA claim settlement ratio calculated?
A1. Claim Settlement Ratio = (Total number of claims paid in a year) ÷ (Total number of claims received during the year). An insurance company discloses these numbers for any financial year on an annual basis. Besides, IRDAI publishes these ratios for each insurance company in India generally in the first quarter of a calendar year. -
Q2. Does consistency of IRDA claim settlement ratio matter?
A2. The consistency of the ratio over a period of years is paramount. The 5-year historical claim settlement ratio of an insurance company needs to be analyzed to check for any inconsistency. An insurance company may be considered more consistent if its historic claim settlement ratio is in a narrower range. A company with a claim settlement ratio in the range of 91% to 98% may be considered more dependable than a company with a ratio in the range of 80% to 95%. -
Q3. Is the IRDA claim settlement ratio a comprehensive parameter?
A3. The IRDA claim settlement ratio comprises an aggregate ratio for all the policies issued by the life insurance company and not the actual ratio for each type of policy issued viz. term insurance, endowment cover, group insurance, money back policy, individual cover, child plan, online plan or offline policy, etc. The ratio is expressed in terms of percentage and not a number. Hence, it does not provide a clear picture of how many claims an insurance company rejected in a year. -
Q4. Does one need to look at other parameters along with the IRDA claim settlement ratio?
A4. Not only should one look at the number of claims settled, but also check the claim amount that the life insurance company has settled. A life insurance company may show a higher claim settlement percentage by a number of policies. However, the same percentage will be a lower percentage in terms of payments of the benefit amount. This may happen when the company settles a higher number of claims with lower amounts and rejects policies with higher claim amounts, i.e., policies with higher life insurance cover. Therefore, while selecting an insurance policy, make sure that the life insurance company has performed well on both the IRDA claim settlement ratio and the claim amount settled. -
Q5. Does one need to keep track of the IRDA claim settlement ratio of the life insurance company throughout the tenure of the policy?
A5. Even if one has provided incorrect information or not disclosed some material facts about oneself, it is the life insurance company’s responsibility to investigate any faults within 3 years from the date of issuance of the policy, or the date of commencement of risk or the date of revival of the policy, whichever is later. E.g., let’s look at a scenario in which one purchases the policy today, and after a few years, the policy lapses due to non-payment of premium. If one chooses to renew the policy again, the 3 year period starts from the date of revival and not from the original date of issuance of the policy. -
Q6. How frequently should one check the IRDA claim settlement ratio?
A6. Since the Insurance Regulatory and Development Authority (IRDAI) releases data on claim settlement ratios of all life insurance companies on an annual basis, it is recommended to check the ratio on an annual basis during the first 3 years of the policy. -
Q7. Does the size of the life insurance company matter?
A7. While evaluating the insurance companies with the highest percentage of settled claims settled, one needs to bear in mind the size of the insurance company. The size has a significant role to play in maintaining a healthy IRDA claim settlement ratio. It is relatively easier for an insurance company that is smaller in size to efficiently evaluate and manage the underwriting risks while issuing a new policy. Unlike a bigger insurance company, its size allows the smaller insurance company to conduct a thorough investigation at the time of issuing every policy and mitigate the risks associated with the underwriting of policies. -
Q8. What should one do to ensure a claim is not rejected?
A8. While buying life insurance products, one must disclose all facts transparently and in detail. This will go a long way in not giving any chance for the insurance company to reject one’s claim. -
Q9. What is the maximum time that may be taken for claim settlement by an insurer?
A9. The maximum time for claim settlement by the insurer should not be more than 30 days.
Written By: PolicyBazaar
You May Also Like
Features and Benefits of Group Life Insurance- By PolicyBazaar -
-
- 20635 Views
Group life insurance products offer benefits to a group of people. Group policies are affordable and the cost of insurance is much lesser than for an individual policy. The insurance cover will be provided to a group of ...
read more
Group Insurance Policies by LIC- By PolicyBazaar -
-
- 15134 Views
It’s a known fact that LIC is the biggest and most trusted insurance company in India. The company works with a customer-centric approach and provides the one-stop solution for all types of insurance needs. To meet th...
read more
Group Life Insurance – What and Why?- By PolicyBazaar -
-
- 14640 Views
A very common problem which is faced by mostly all the organisations is Employee attrition for encountering which, the Human Resource department keeps on evolving ways to retain employees. Some focus on the culture &...
read more
How Beneficial is it to have a Group Life Insurance?- By PolicyBazaar -
-
- 5996 Views
Employee attrition has become a common issue for a large number of organizations, these days. And, in order to effectively deal with this issue, HR department keeps on trying every trick in the book to retain their value...
read more
What is Group Term insurance? How does it Benefits Both Employers and Employees?- By PolicyBazaar -
-
- 1977 Views
Nowadays, a large number of organizations face a common problem of employee attrition. However, providing group insurance plan to your employees is the best way to deal with this type of issue. In today’s day and age,...
read more
