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Claim Settlement Ratio of Term Insurance Plan Providers

Claim Settlement Ratio (CSR) is an important parameter in the selection of an insurance policy. If you are going for a pure insurance plan, a term insurance plan is an ideal option. The term insurance plan is pocket-friendly, and the financial benefits are very high. However, it is important to acknowledge that the insurance company should pay the death benefit after the nominee initiates the claim settlement process.

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What is Claim Settlement Ratio?

The term insurance claim settlement ratio, or CSR, is the ratio of the total number of approved claims and the total sum of claims received by the insurance company. This ratio is measured every financial year. The information is available on the insurance company's official website. The claim settlement ratio is measured for all insurance products and is not confined to the term policy alone.

The Insurance Regulatory and Development Authority of India (IRDAI) releases the details of claim settlements of all life insurance companies every year for people to be aware of all necessary details regarding life insurance companies. This transparency allows people to make an informed decision so that they can buy the best term insurance plans from the insurer with the highest CSR. Check the CSRs of all the Indian life insurance companies below.

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CSR of Life Insurance Companies – IRDAI Annual Report 2022-23

The recent data for Claim Settlement Ratio is available in IRDAI Annual Report for FY 2022-23. This is calculated on the basis of individual claims settled over total claims (individual) for the financial year. Below is the table illustrating the claim settlement ratios of term insurance companies in India for FY 2022-23:

Let’s have a look at the CSRs of different types of life insurance companies as per IRDAI Annual Report. The table below shows the life insurance claim settlement ratio for FY 2022-2023:

Insurance Provider Life Insurance Claim settlement ratio
Aditya Birla Life Insurance 98.1%
Ageas Federal Life Insurance 96.06%
Aviva Life Insurance 98.75%
Bandhan Life Insurance 99.4%
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%

*Information Sourced from IRDAI Annual Report 2022-23

Disclaimer: Policybazaar does not endorse, rate, or recommend any particular insurer or insurance product offered by an insurer. 

If the claim settlement ratio of a company is higher than 95%, it is considered good. The average value of the claim paid will be high if the sales of term insurance are also high.

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What is Term Insurance Claim Settlement Ratio (CSR) by Number?

Term insurance claim settlement ratio is an important parameter to consider before choosing the right insurer to buy term plan from. In terms of numbers, the claim settlement ratio in FY 2022-23 is highest in Max Life Insurance with 99.5% CSR, followed by HDFC Life Insurance and Bandhan Life Insurance, both with 99.4% CSRs. Other renowned insurers with high CSRs in FY 2022-23 include Edelweiss Tokio Life Insurance, PNB MetLife Insurance, Tata AIA Life Insurance, etc., each with over 99% CSRs.

The individual death claim settlement ratio (CSR) of the life insurance industry in FY 2022-23 was 98.45%. This means that the life insurance industry has settled more than 98% of the total individual death claim requests that were received during the financial year 2022-23. The overall claim settlement ratio (CSR) was 98.64% in 2022-23.

How to Calculate Term Insurance Claim Settlement Ratio (CSR)?

You can calculate term insurance claim settlement ratio using this formula:

Claim Settlement Ratio = (Total claims settled in one FY / Total claims received in a year) x 100

Here is an example to understand it better:

An insurance company received 1000 death claims between April 1, 2022 and March 31, 2023. If the insurance company paid 950 claims successfully, and 40 claims were rejected. The company is yet to decide the fate of 10 claims.

Therefore, the claim settlement ratio will be 950/1000= 95%

The claim rejection ratio = 40/1000 = 4%

The claim pending ratio = 10/1000 = 1%

In the scenario mentioned above, the insurance company does not accept or excludes the remaining 5 percent of claims. Insurance providers may reject claims due to various reasons like fraud, impersonation, or misrepresentation. While the term plan claim settlement ratio provides insights into settled claims in a year, it's not wise to judge a company's stability solely on this ratio. Other factors like policy benefits, service quality, and policy options should also be considered when choosing an insurance company.

*Note: You can use the term plan calculator to calculate the premium amount of your term insurance plan.

What Is the Importance of Term Insurance Claim Settlement Ratio?

The term insurance claim settlement ratio is always mentioned as a percentage. The standardization was done by the IRDAI (Insurance Regulatory Development Authority of India), and the information is published on an annual basis.

To understand the importance of claim settlement in term insurance, you need to understand what is term insurance. After assessing the CSR of different companies, you can choose the best term insurance from the most suitable company.

  1. It helps assure the financial protection and security of your loved ones

    By purchasing a life insurance plan, you ensure the financial protection of your family against unfortunate events. When the insurer settles the claim, your family is more likely to have a hassle-free, transparent and simple claim process. Thus, you can rest assured that your family does not have to struggle to receive the sum assured. 

  2. Indicates the reliability of insurance company

    The term insurance claim settlement ratio indicates the ability of an insurer to pay the sum assured amount to you or your nominee. If your respective insurer is maintaining a high CSR consistently over a certain amount of time, they are considered to settle claims quickly and thus are called a reliable company. 

What are the Factors that influence Term Insurance Claim Settlement Ratio?

The following factors will also impact the insurer’s CSR.

  • Non-disclosure – If the policyholder fails to inform the company about his/her true condition. Any health issues should not be hidden. When the insurance companies come to know the truth about your health that can adversely affect your insurability, the insurance company may reject your claim. Thus, non-disclosures negatively impact CSR.

  • Fraud – The policyholder may conceal information with the intention to cheat the insurance company. If the insurance company is suspicious about the authenticity of the proposer’s claim, the company may decline the claim. It will have a negative impact on CSR.

  • Ignorance of policyholder – If the policyholder fails to follow the terms and conditions mentioned by the insurance company. It is an extremely unpleasant experience when the policyholder isn’t clear about the terms and conditions of the policy. You should spend time and effort to go through the contents of the policy. If you are not sure of any clause, you can approach the insurance company directly or the agent.

  • Nomination update/error – If the policyholder fails to fill the nomination column in the insurance proposal form. It will have a negative impact on the insurance company. The insurance company may fail to process the claim if there is a delay in identifying the legal heir. The nominee should be present while settling the claim. If there is any dispute between two parties with reference to the nominee, the issue should be resolved. No claim settlement will take place until the dispute is resolved.

How to Choose the Best Term Insurance Company in India?

To choose the best term insurance company in India, you should consider the following factors:

  1. Claim Settlement Ratio

    The term insurance claim settlement ratio (CSR) helps you understand the company’s claim settlement abilities over the past financial year. Using this, you can compare term plans from different insurance companies and purchase the plan from the company with the most suitable term plan claim settlement ratio.

  2. Dedicated Customer Service

    You should always opt for a term plan from an insurer with the most dedicated customer service, as it can help you in the long run. The top 10 term insurance claim settlement ratio companies offer 24x7 customer support and resolve customer queries regarding the policy. 

  3. Customer Experience

    The customer reviews with the insurer give us an insight into the customer’s experience with the company. This way, you can choose a company with the best customer service.

  4. Inflation

    Inflation will reduce the worth of your savings. Hence, you should choose an insurance company with a ‘sum assured’ that fulfils your financial needs in the best possible way. You can easily use a term plan calculator to get an estimate of the premiums you need to pay for the desired life cover.

  5. Riders

    By choosing various kinds of riders, you will be eligible for a significantly increased financial benefit. There are various term insurance riders, such as critical illness, accidental death, accidental total permanent disability, waiver of premium, hospicare, and terminal illness, with which you will get a lump sum amount on the occurrence of the covered eventuality.

    *Note: It is wise to firstly understand what is term insurance and what is the CSR of the insurer before you choose the best term plan online.

Wrapping It Up!

You should be aware of the term insurance claim settlement ratio while buying a suitable term policy. You can compare term plan from different insurers based on their term plan claim settlement ratios and make an informed decision about the term plan best suited for you. In addition to the term insurance claim settlement ratio, you should consider other prominent features as well in choosing the best term policy as per your objective. 

FAQs

  • Q: What is Claim Settlement Ratio (CSR) in term insurance?

    The Claim Settlement Ratio (CSR) is the ratio of approved claims to the total claims received by an insurance company. It indicates the insurer's efficiency in settling claims and is a crucial factor in selecting an insurance policy.
  • Q: How is CSR calculated?

    CSR is calculated by dividing the total number of settled claims by the total number of claims received, then multiplying by 100 to get a percentage.
  • Q: Why is CSR important in term insurance?

    CSR assures the financial protection of your loved ones by indicating the insurer's reliability in settling claims promptly and transparently.
  • Q: What factors influence Term Insurance CSR in India?

    Non-disclosure, fraud, policyholder ignorance, and nomination errors are factors that can impact an insurer's CSR in India.
  • Q: How can I choose the best term insurance company in India?

    Consider CSR, dedicated customer service, customer experience, inflation, and available riders to choose the best term insurance company that suits your needs.
  • Q: Where can I find information on CSR of insurance companies?

    You can find the CSR of insurance companies in the IRDAI Annual Report or on the official website of the respective insurers.
  • Q: What else should I consider besides CSR when buying term insurance?

    In addition to CSR, consider other policy features, such as premiums, riders, and customer service, to make an informed decision about the best term policy for you.
  • Q: What are the top 10 term insurance companies with the highest Claim Settlement Ratio in FY 2022-23?

    Ans: The top 10 term insurance companies with the highest CSR in FY 2022-23 are:
    • Max Life Insurance - 99.5%
    • HDFC Life Insurance - 99.4%
    • Bandhan Life Insurance - 99.4%
    • Edelweiss Tokio Life Insurance - 99.2%
    • Tata AIA Life Insurance - 99%
    • Bajaj Allianz Life Insurance - 99%
    • Canara HSBC Life Insurance - 99%
    • PNB MetLife Insurance - 99.1%
    • LIC - 98.6%
    • Reliance Nippon Life Insurance - 98.6%
  • Q: How can I find the best term insurance based on Claim Settlement Ratio?

    Ans: To find the best term insurance based on CSR, review the annual IRDAI report and compare the CSRs of different insurers. Opt for companies with a consistently high CSR, indicating their reliability in claim settlements.
  • Q: Where can I find information on the Claim Settlement Ratio of term insurance companies?

    Ans: Information on the CSR of term insurance companies can be found in the IRDAI Annual Report, available on the IRDAI website and the official websites of the respective insurance companies.
  • Q: What is the settlement ratio for term insurance claims in 2024?

    Ans: The top 10 settlement ratios of life insurance companies (in FY 2022-23) are:
    • Max Life Insurance - 99.5%
    • HDFC Life Insurance - 99.4%
    • Bandhan Life Insurance - 99.4%
    • Edelweiss Tokio Life Insurance - 99.2%
    • Tata AIA Life Insurance - 99%
    • Bajaj Allianz Life Insurance - 99%
    • Canara HSBC Life Insurance - 99%
    • PNB MetLife Insurance - 99.1%
    • LIC - 98.6%
    • Reliance Nippon Life Insurance - 98.6%
  • Q: Which company is best for term insurance?

    Ans: The best companies for term insurance plans are those with the highest CSRs and additional benefits that align with your life goals and requirements. You can choose the best term insurance plans from Policybazaar after comparing from among 15+ top Indian insurers.
  • Q: Is LIC term insurance good?

    Ans: Yes, LIC term insurance is good and reliable. It has a CSR of 98.6% in FY 2022-23.
  • Q: Which term insurance has the highest claim-settlement ratio in latest financial year?

    Ans: The term insurance with the highest claim-settlement ratio in latest financial year (FY 2022-23) is Max Life Insurance with CSR of 99.5%.

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