Importance of Claim Settlement Ratio in India

The claim settlement ratio is one of the most important aspects of the Indian insurance industry.  The claim settlement ratio essentially highlights the aspect of the number of claims settled out of the complete claims obtained by the insurance sector.

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In case an individual intends to buy a term insurance policy, the claim settlement ratio is one of the principal factors that should be taken into account. Buying a term plan is important to secure the financial future of the family. However, before buying the term insurance plan, it is better to check the claim settlement ratio of the life insurance company.

The claim settlement ratio is a measurement used for assessing the reliability of the insurance company in terms of paying the claims.

But wait, let me tell you something

The claim settlement ratio can be calculated by using the following formula:

Claim Settlement Ratio= The total number of claims paid during the period/ the total received claims

The IRDAI publishes and makes a ratio of all the insurance companies in India, which is brought into the public domain in the initial month of the calendar year. A policyholder should not just take into account the ratio of the companies but should also observe the number of claims received by the company.

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How Consistent Should be the Claim Settlement Ratio?

To simply put, regardless of whether an individual buys a term insurance plan or a life insurance plan, etc. claim settlement ratio of the insurance company is important. Besides, the consistency of the claim settlement ratio holds utmost significant importance. While selecting the insurance company, it is advisable to look for the claim settlement ratio of the companies in the recent five years.

No wonder the rule is simple smaller is the range of the CSR, reliable and better is the insurance company. For instance, the insurance company with a ratio in the range of 90% to 96% is more reliable compared to a company with the CSR in the range of 75% to 93%.

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Claim Settlement Ratio of Life Insurance Companies in India

The table below shows the claim settlement ratio of the various life insurance companies in India and is as per the yearly report of IRDAI 2019-2020:

Insurance Companies

Complete Number of Claims

Claims Paid

Claims Repudiated

Claims Rejected

Death Claim Settlement Ratio

Aditya Birla Sun Life

5162

5035

108

0

97.54%

Aegon

351

344

7

0

98.01%

Aviva

810

790

11

4

97.53%

Bajaj Allianz

12127

11887

237

0

98.02%

Bharti AXA

1320

1285

33

0

97.35%

Canara HSBC OBC

1276

1252

22

0

98.12%

Edelweiss Tokio

326

272

54

0

83.44%

Exide Life

3468

3404

26

0

98.15%

Future Generali

1143

1089

51

0

95.28%

HDFC

12626

12509

54

15

99.07%

ICICI Prudential

11460

11212

153

0

97.84%

IDBI Federal

1416

1366

45

0

96.47%

India First

2241

2166

66

0

96.65%

Kotak Mahindra

3346

3225

112

0

96.38%

LIC

758916

733809

6124

2172

96.69%

Max Life

15643

15342

120

0

99.22%

PNB MetLife

4364

4241

123

0

97.18%

Pramerica Life

569

560

7

0

98.42%

Reliance Nippon

8017

7866

149

0

98.12%

Sahara

654

585

10

13

89.45%

SBI Life

22490

21257

1157

0

94.52%

Shriram

3074

2816

195

58

91.61%

Star Union

1248

1210

35

0

96.96%

TATA AIA

2982

2954

28

0

99.06%

Disclaimer: Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by an insurer.
What is the Process to Settle the Claims?

Take a look below to understand the process of settling the claims:

Reporting

At the onset, an individual should make sure that the claims are reported on time. The claims can be easily reported at the respective branch, online or central office. The policyholder can also contact customer support or drop an email. Reporting is of prime importance and for a policyholder is more approachable.

Quick Processing

The processing of the claim needs to be quick. Moreover, the process of the claim settlement should not be tedious and the customer should have a hassle-free experience. The less is the average turnaround time to settle the claim, the better it will be.

Settlement

Once all the relevant documents are duly assessed and approved only then the final settlement will take place. The claims need to be settled as quickly as possible right from the intimation date.

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How to Avoid Rejection of Claims?

To enjoy the benefits of the insurance policy and not face a claim rejection, the policyholder should take some important steps. It generally starts when the policy papers are being signed by the policyholder. This is the time when the insurance company assesses every aspect of the policyholder such as the risk profile, and so forth and accordingly underwrites the policy.

The following are the steps that should be followed to avoid claim rejection:

  • To begin with, the policyholder should disclose all the information to the insurance company. Specifically in terms of smoking habits and medical condition do not give any false information; however, assessing the risk will vary from insurer to insurer. In case an individual is an avid smoker or has a critical ailment that was not disclosed earlier and the insurance company gets to know about it at the time of claim chances are that it could get reject.
  • When purchasing the insurance plan, it is highly recommended that the policyholder should fill the form themselves. Do not let an agent fill the form as chances are that the agent might miss out on some important information.
  • During the free-look period, the policyholder should check the policy wordings and carefully examine the terms and conditions. In case, the policyholder is not satisfied with any clause, then the policy can be returned to the insurance company for a refund.
  • As soon as the policyholder buys the policy, the first person to be informed is the nominee. In case there is a need that the nominee needs to raise the claim the person needs to be aware of it. The timely claim filing is important as that would ease the claim settlement process.

By Now, You Should Know

The claim settlement ratio of the insurance provider is a good indicator to provide an insight into the policyholder in deciding the policy. However, it is highly recommended that the insurance policy should not be bought just on the premise of the claim settlement ratio. Whether an individual buys a term insurance policy or any other policy it is equally important to check the coverage being offered by the different plans from the insurance companies.

Invest time before making the final purchasing decision, assess the requirements and zero down the insurance plan that suits and fulfil the needs of the family and the financial future is duly secured.

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