There are 24 life insurance companies in India with 23 being private players and 1, LIC, is owned by the Government of India. Every insurer offers a range of life insurance policies so that you can choose a plan depending on your coverage needs.
Life insurance policies provide financial security in the case of a premature demise such that it helps in replacing your income and your family is not financially impacted. Moreover, with the different types of life insurance plans, you can fulfil other goals too–
- Planning for your child’s secured future
- Planning for a retirement fund
- Creating investments for your goals
- Meeting medical emergencies,
However, a life insurance policy proves it’s worth only when it settles the claim, easily, when needed. This is the true test of the policy as well as of the life insurance company. Every policyholder wants a hassle-free claim settlement and that is why the Claim Settlement Ratio is considered important when choosing an insurer.
Claim Settlement Ratio – the concept
Claim Settlement Ratio (CSR) is a numerical figure that measures the claims that a life insurance company has settled successfully against the total claims that were made on it. The ratio is measured in a percentage and the higher the percentage the more favourable the insurer is when it comes to claim settlement.
Claim Settlement Ratio – (number of claims settled / total number of claims raised) * 100
For example, if an insurer settles 99 claims out of 100, its CSR would be 99%.
Latest Claim Settlement Ratio of life insurers
The Insurance Regulatory and Development Authority of India (IRDAI) calculates and publishes the CSR of life insurance companies in its annual report. This report captures the CSR of each financial year. For the financial year 2020-21, the IRDAI published its reports in December 2021. The report stated the following figures –
- In the financial year 2020-21, an aggregate claim of 11.01 lakhs was raised on life insurance companies for individual life insurance policies. Against this, 10.84 lakh claims were settled valuing INR 26,422 crores.
- 9527 claims were repudiated valuing INR 865 crores
- 3032 claims were rejected valuing INR 60 crores
- 3055 claims were pending to be cleared by the end of the financial year valuing INR 623 crores
The financial year 2020-21 was good for policyholders as the claim rejections and repudiations were reduced. Here are some numbers –
- The overall CSR of the life insurance industry was recorded at 98.39% in FY 2020-21. This is an increase compared to 96.76% CSR which was recorded in FY 2019-20
- The claim repudiation or rejection ratio reduced to 1.14% in FY 2020-21 compared to 1.28% in FY 2019-20
Now let’s look at the CSR of life insurance companies for the financial year 2020-21 –
Name of the insurance company
Claim Settlement Ratio
Aditya Birla Sun Life Insurance Company Limited
Aegon Life Insurance Company Limited
Ageas Federal Life Insurance Company Limited
Aviva Life Insurance Company Limited
Bajaj Allianz Life Insurance Company Limited
Bharti AXA Life Insurance Company Limited
Canara HSBC OBC Life Insurance Company Limited
Edelweiss Tokio Life Insurance Company Limited
Exide Life Insurance Company Limited
Future Generali Life Insurance Company Limited
HDFC Life Insurance Company Limited
ICICI Prudential Life Insurance Company Limited
IndiaFirst Life Insurance Company Limited
Kotak Mahindra Life Insurance Company Limited
Max Life Insurance Company Limited
PNB MetLife Life Insurance Company Limited
Pramerica Life Insurance Company Limited
Reliance Nippon Life Insurance Company Limited
Sahara India Life Insurance Company Limited
SBI Life Insurance Company Limited
Shriram Life Insurance Company Limited
Star Union Dai-ichi Life Insurance Company Limited
TATA AIA Life Insurance Company Limited
Life Insurance Corporation of India
Max Life and Aegon Life led the race with the highest claim settlement. LIC also posted a good figure of 98.62%.
Things to know about CSR
The CSR helps you pick the right insurer who would provide you with a smooth claim settlement experience. However, here are a few things to know about CSR –
- CSR does not measure the claim amount settled by the insurer. It only measures the number of claims settled.
- If a claim is raised towards the end of the financial year, it might remain outstanding when the CSR is calculated. This affects the CSR
- If you make a fraudulent claim, it would be rejected, even if the insurance company has a high CSR.
The bottom line
Whilecomparing insurance companies to buy a life insurance policy, do check out the CSR. The ratio is updated every year and an insurer with a consistently high CSR is recommended as it means that the insurance company has consistently settled most of the claims raised on it.