Which insurance company has highest claim settlement?

IRDA, the Insurance Regulatory and Development Authority of India, publishes the Claim Settlement Ratio for life Insurance companies each year. And this is valid till the next year, when the updated report is released. Claim Settlement Ratio is a ratio of the number of claims paid to customers by the insurance company to the total claims received by the company. This is expressed as a percentage.

Claim Settlement Ratio = (Total claims approved and paid)/(Total claims received by the insurer)*100

The balance claims are rejected for impersonation, misrepresentation, fraud, or pending decision by the Life Insurance Companies. The claim settlement ratio is measured for one financial year for all life insurance products of a company.

Let us take the example of an insurance company that has received 1,300 death claims under life insurance between 1 April 2016 and 31 March 2017. Out of these claims:

• The company paid 1250 claims to the beneficiaries of the dead.
• The insurer rejected 20 claims
• The company has not yet taken a decision on the remaining, i.e., 30 claims

In this scenario, the claim settlement ratio of the company for its life insurance business is (1250/1300)*100 = 96.15%.

The claim rejection ratio or claim repudiation ratio is (20/1300)*100 = 1.5%.

The claim pending ratio of the insurer is (30/1300)*100 = 2.3%.

It should be noted that the claim settlement ratio is always expressed as a percentage and it is easy to measure. It is highly recommended to assess the claim settlement ratio of an insurance company before buying a product. This will help you get a clear picture of the way claims are handled by the company and its position in the market.

The claim settlement ratio of life insurance companies is consolidated in a report and is published at the IRDA website under the Annual Reports section. The report also has information regarding the premiums collected by the insurer and the split of linked and non-linked premium.

Claim Settlement Ratios of Life Insurance Companies for 2021-2022:

LIC’s claim settlement ratio was 98.62% as of March 31, 2021, down from 96.69% on March 31, 2020, while the proportion of claims repudiated/rejected fell to 1.0% in 2020-21, down from 1.09% the previous year.

The claim settlement ratio for individual policies of life insurance companies for the financial year 2021-2022 are as follows:

Settlement of individual death claims by percentage of benefit amount:

How to Interpret the Above Data?

The above data can be interpreted in the following ways:

• The CSR higher than 80% is a good claim settlement ratio. If a company of more than 90% CSR is offering a great value product, it is more than welcome.
• Also look at the average claim settlement time taken but the company. This is a great indicator of the process efficiency of the company. Anything less than 30 days is good and anything less than 20 days is excellent.
• The pending claims could be due to genuine reasons and do not read too much into it.
• If the sale of life insurance is higher, the average value of the claim paid will also be higher.
• It is found that claim denials are maximum during the first two policy years. In life insurance these are referred to as early claims. New insurance companies are seen to have more early claims in comparison to old life insurance providers. Hence, claim settlement ratio is lower for newer companies.

Use the claim settlement ratio as a filter while buying a life insurance plan. Although selecting a company with a high claim settlement ratio is advised, you may still face a scenario in which your claim is rejected. So how do you ensure that your claim is not invalidated?

You can take several steps to enjoy the benefits of your policy without having to face claim rejection. It all begins when you sign on the dotted line at the time of policy purchase. That is the time when the insurance company would assess the risk you pose and underwrite the policy accordingly. Listed below are some steps to ensure a seamless claim settlement experience:

1. Make full disclosure of your details. If you forget to mention about your smoking habits or a pre-existing medical condition, the way in which the insurer assesses your risk will differ. In case the insurance company realises this at the time of a claim, it could be rejected.
2. The policyholder should be familiar with the insurance application form and ideally fill it out on his/her own. It is not a good practise to get the insurance agent to fill out the form. The agent may not be aware of the customer’s personal details and may miss out on mentioning something on the form.
3. The buyer should review the policy documentation during the free-look period and check if all the terms and conditions are as per his/her expectations. In case he/she is dissatisfied with any of the clauses, he/she can return the policy back to the insurer for a refund.
4. As soon as the buyer has bought the policy he/she should inform the nominee of the same. If there arises a situation in which the nominee is required to raise a claim under the policy, he/she should follow the prescribed claim filing process. If the claim filing is done accurately, the claim settlement process is also faster.

Life Insurance Claims Type

Life insurance claims are of two types. They are mentioned briefly below –

1, Maturity claims – Payment for maturity claims is made when the life insurance policy matures. This essentially indicates that a specific amount will be paid to the life guaranteed if the policy period finishes and they outlive the whole policy term. In order to receive a maturity claim, the life assured must fill out a fully completed and signed discharge application. The amount that the maturity claims brought in is free of tax as per the ITA, 1961.

2. Death Claims – In this, in the event of the policyholder’s passing, the claimant may ask for death benefits. This only indicates that, in the event of the policyholder’s passing, a sum insured amount is paid to the nominee. Notifying the insurance company of the death is necessary. According to ITA, 1961 § 10(10D), the amount received as the death claim benefit is free of taxes.

Why is Claim Settlement Ratio Considered Important

The claim settlement ratio is an important metric to take into account since it shows how an insurance company often resolves claims. Purchasing life insurance coverage is a goal for the future. To receive the benefits of the policy, you must not only pay a sizeable portion of the premiums over a certain payment period, but you also need to make sure that your insurance policy documentation is complete and accurate to avoid rejection. As a result, you must shop around and choose a life insurance policy from a provider with a high claim settlement percentage. The Claims Settlement Ratio is a trustworthy metric that can assist you in evaluating whether a particular insurer.

Process of Claiming Life Insurance Maturity

The procedure for obtaining the maturity benefits from an insurance policy is known as a life insurance maturity claim. The process of filing a maturity claim for life insurance is difficult. It’s critical to comprehend the procedure and be prepared to handle it in an emergency. When filing a maturity claim, an insured party must notify the insurance provider of the policy’s maturity or the policyholder’s survival. The procedure begins with a review of the policy. and figuring out whether any additional payments, such as premiums, are required before the claim may be processed.

Subsequently, the life insurance provider will ask for all the information and paperwork needed in order to fully pay a claim. This covers death certificates, mortgage statements, tax return copies, and any other papers that might be required. After looking over these records, the company will choose whether or not to approve the claim’s payment.

In conclusion, the claim settlement ratio of a life insurance provider is a reliable indicator of its capacity to honour claims, but the ratio could be skewed based on several conditions. So, do not limit your research to the claim settlement ratio when deciding on an insurer. You can compare the coverage offered by multiple plans from different insurance companies and settle on one that suits you best.

 on Claim Settlement Ratio for Life Insurance

1. What does the term claim settlement ratio mean?The claim settlement ratio refers to the percentage of claims that the insurance company settles in a year compared to the total number of claims received. It serves as a measure of the company’s trustworthiness. Typically, the higher the ratio, the more dependable the insurer is. The Insurance Regulatory and Development Authority of India (IRDAI) website offers the CSR of various insurers for easy access.
2. Why is the claim settlement ratio significant?The claim settlement ratio is crucial in guaranteeing your family’s financial security. The primary goal of purchasing life insurance is to safeguard against unexpected events. However, the objective becomes futile if the insurer fails to fulfil its obligation. Conversely, if most claims are honoured, the claim process is likely to be straightforward and transparent, ensuring that your loved ones receive the sum assured without complications. In addition, the claim settlement ratio reflects the reliability of the insurance provider. Consistently maintaining a high CSR over an extended period indicates the insurer’s ability to pay the sum assured to you or your nominee and decreases the likelihood of them defaulting on their compensation commitment.
3. What is the method for determining the claim settlement ratio?To calculate the claim settlement ratio, use the following equation: Claim Settlement Ratio (CSR) = (Total number of claims settled in a year / Total number of claims in a year) x 100. For instance, suppose an insurance provider, Company A, resolved 9,500 out of 10,000 claims during the 2021-2022 period. In that case, the company’s claim settlement ratio would be 95% (9,500/10,000 x 100).
4. What are the various types of life insurance claims?Life insurance claims fall into two categories: Maturity Claims: At the conclusion of the policy tenure, maturity claims are paid out. A policyholder will receive payment either as a lump sum or regular income if the policyholder survives the policy term, depending on the policy features and preferences specified by the policyholder. The payment amount may be fixed or market-linked, depending on the type of policy. Death Claims: In the event of the policyholder’s death during the policy period, death claims are paid out. The life insurance provider pays the sum assured to the policyholder’s nominee. Death claims are usually paid out as a lump sum or as regular income, depending on the policyholder’s selection at the time of purchasing the policy.
5. Why is proper disclosure critical for a better claim settlement ratio?If a non-disclosure or misstatement of facts is discovered during an investigation, the claim may be denied. Non-disclosure refers to the failure to reveal a fact that affects the policy issuance decision in the proposal while withholding or providing inaccurate information when answering questions in the proposal form is referred to as a misstatement. As a result, providing accurate disclosure will have a favourable impact on the claim settlement ratio. For example, if an applicant has kidney failure but fails to inform the insurer in the proposal form, it is regarded as non-disclosure. Likewise, if an applicant exaggerates their income, it is considered a misstatement.
6. What is the timeframe for reporting a claim?Reporting a claim as soon as possible is advisable to expedite claim processing. For death claims, there is no specific time frame. Disability claims should be reported within 120 days from the date of the disability. In the case of critical illness or major surgery, the claim must be reported within 60 days of the diagnosis or surgery date.
7. In what situations would the insurance company deny a claim?A claim may be denied if there is a ‘non-disclosure’ or ‘misstatement’ of facts discovered during the investigation. Failure to disclose a fact affecting the policy issuance decision in the proposal is called ‘non-disclosure.’ Likewise, withholding or providing inaccurate information while answering questions in the proposal form is called a ‘misstatement.’ For example, if an applicant has kidney failure but fails to inform the insurer in the proposal form, it is considered non-disclosure. Similarly, if an applicant exaggerates their income, it is regarded as a misstatement. The proposal form is the document in which all relevant information is provided while applying for an insurance policy.
8. Who is entitled to receive the claim benefit?The claim benefit can be acquired by: The nominee or their legal guardian (if the nominee is a minor) if you are the insured person. The proposer, if you are not the insured person (The insured person refers to the person for whom the life or health insurance policy has been issued). The assignee, if the policy has been assigned. The insured person, in case of living benefit claims such as claims under disability, critical illness, and major surgery riders. Nominee refers to the person you designate at the time of policy purchase to receive the benefits of your insurance policy in case of your absence.
9. Who can be the beneficiaries of a life insurance policy?While purchasing a life insurance policy, a policyholder is required to name the beneficiary or beneficiaries. The policyholder can name more than one beneficiary and determine the percentage of the benefit each one should receive. Typically, beneficiaries are spouses and blood relatives; however, you can also nominate a friend by providing reasons to avoid any conflict with legal heirs.
10. How will I receive the claim amount?At the time of submitting claim documents, you need to select the mode of receiving the claim amount. You can receive the claim amount in the mode you choose, and it is advisable to choose electronic funds transfer to enjoy swift and convenient services.
11. Which life insurance company has the highest claim settlement ratio?Max Life Insurance has the greatest claim settlement ratio in terms of claim number, with 99.34% for the fiscal year 2021-22. Exide Life Insurance and Bharti Axa Life Insurance came in second with a 99.09 percent death settlement percentage.
12. Why is there a claim settlement ratio greater than 100%?It demonstrates the insurance company’s financial ability to pay an insurance claim. If an insurance business’s ICR is greater than 100%, it signifies that the company is paying more towards claim payment than it receives in premiums.
13. What exactly is the claim settlement ratio?It is the ratio of claims paid to claims submitted; the greater the ratio, the better for the insurance. Before choosing an insurer, you should look into the claim payment ratio.
14. Is a high claim settlement ratio beneficial?The claim settlement ratio is the percentage of claims settled by an insurance company in a given year as a percentage of the total number of claims received. It is used to assess the company’s credibility. In general, the higher the ratio, the more reliable the insurer.
15. Why is a claim ratio considered important?The claim resolution ratio demonstrates their willingness to pay the sum guaranteed to you or your nominee. If your provider has continuously maintained a high CSR over a long period of time, they are unlikely to renege on their compensation pledge.