life insurance claim settlement ratio: Latest life insurance claim settlement ratios of insurance companies in India

As the main motto of buying a life insurance policy is to secure dependent family members in case of a policyholder’s unfortunate death, the claim settlement ratio plays an important role when choosing the policy. Claim settlement ratio is a percentage of claims that the insurer has paid out against the number of outstanding claims during a financial year. So if you are planning to buy a new life insurance policy or renew your existing one, along with checking the premium amount and coverage, you must check the claim settlement ratio of the insurer.

The Insurance Regulatory and Development Authority of India (Irdai) has published the details of claim settlements of all life insurance companies for the year 2021-22 in its annual report. As per this latest data, life insurance companies in India have registered a slight improvement in their individual death claim settlement record in 2021-22 compared to a year earlier, which was an extra ordinary year due to covid-19 related deaths. The individual death claim settlement ratio of the life insurance industry increased to 98.64 per cent in 2021-22 from 98.39 per cent in the previous year, as per Irdai’s report.

Source: Irdai Annual Report 2021-22

Max Life Insurance has the highest claim settlement ratio in terms of the number of claims with 99.34 per cent for the year 2021-22. With a 99.09 per cent death settlement ratio, Exide Life insurance and Bharti Axa Life Insurance bagged the second position. As many as 14 life insurers have a claim settlement ratio of more than 98 per cent.

All the private life insurance companies had together settled 2.37 lakh death claims while LIC alone settled 13.49 lakh death claims in 2021-22, as per the Irdai report. In terms of benefit amount paid, private insurers settled Rs 17,410 crore whereas LIC settled Rs 28,408 crore in 2021-22. In terms of numbers, LIC registered a 98.74 per cent claim settlement ratio and in terms of benefit amounts, the insurer maintained a 96.02 per cent claim settlement ratio.

Also Read: Latest health and general insurance claim settlement ratio of companies in India

The claims repudiated ratio indicates how many claims the insurer finds to be invalid and hence, has not paid the claimed amount. There are many reasons a life insurance company will repudiate a claim after it has accepted it for processing.

Source: Irdai Annual Report 2021-22

Check claim paid ratio by the amount
The claims paid ratio by amount indicates the percentage of the total value of claims submitted to an insurance company that is ultimately paid out. A high ratio would suggest that the company is paying out a large proportion of the total value of claims submitted to it, while a low ratio would suggest that the company is denying or delaying many claims. Both claim paid ratio by numbers and claim paid ratios by amount are used to measure the financial performance of an insurance company, and to assess its ability to pay out claims to policyholders.

“Claims paid ratio by numbers can be useful for policyholders who want to get a sense of how easy it is to file and have claims processed and paid by the insurer. On the other hand, the claims paid ratio by amount can be useful for policyholders who are more interested in the amount of money they might expect to receive if they file a claim,” said Sanjiv Bajaj, Jt. Chairman & MD, Bajaj Capital.

“It’s always best for the policyholder to check and compare both ratios before buying the policy to have a comprehensive understanding of the insurer’s claims-paying ability,” he added.

“It is highly recommended that customers must ensure to check all the reasonably dependable measurement indicators like claims paid ratio by amount, the experience provided by the insurer and how long the insurer takes to settle the claims,” said Tarun Mathur, Chief Business Officer – General Insurance, Policybazaar.com