A Comparative List of Different Companies
Life insurance policies are long term contracts. They promise the payment of the plan benefit if the insured dies during the term of the plan. You buy a life insurance policy with the expectation that the plan benefit would give you and your family a financial corpus to tide over tough times. It is, therefore, at the time of claims that the benefit of a life insurance policy is truly felt. But what if your claim is not paid by the company?
Life insurance companies always endeavour to pay all the claims that are intimated to them. However, due to some reason or another, all the claims might not be settled. To measure the proportion of claims that the company has settled, a report of Claim Settlement Ratio (CSR) is calculated and published by the Insurance Regulatory and Development Authority of India (IRDAI). IRDAI calculates the CSR of all life insurance companies in a financial year and publishes it annually. The ratio is, therefore, also called IRDAI Claim Settlement Ratio. Let’s understand what the ratio is all about –
What is Claim Settlement Ratio?
Claim Settlement Ratio, as mentioned earlier too, is the ratio of the number of claims settled by the insurance company against the total claims raised on it. The formula for the ratio is as follows –
Claim Settlement Ratio = (number of claims settled / total claims made) * 100
For instance, if 100 claims are made on an insurance company and the company settles 98 claims, the Claim Settlement Ratio would be 98%.
Importance of Claim Settlement Ratio
The claim settlement ratio of an insurance company highlights the company’s credibility in settling its claims. A high ratio indicates that the company settles a maximum of its claims which is a favourable aspect. It means that your claim would have a higher probability of getting settled. A low ratio, on the other hand, is a bad sign as it shows that the insurer settles a limited number of claims. This might jeopardise your claim settlement and should be avoided. Thus, the claim settlement ratio helps you find out which insurance company is better than the others in terms of claim settlements.
Top #3 Things-to-know about Claim Settlement Ratio:
Here are some important aspects of the ratio that you should know –
- The ratio is always expressed as a percentage
- If you deduct the ratio from 100, you would get the percentage of claims rejected by the insurance company or pending at its end.
- The ratio measures the claims settled in one financial year starting from 1st April of one ear and ending on 31st March of the next year. So, if the ratios are for the financial year 2018-19, it would measure the claim settlement record between 1st April 2018 and 31st March 2019.
Claim Settlement Ratio of Life Insurance Companies:
Here is a table showing the Claim Settlement Ratio of all life insurance companies for the financial year 2017-18:
|Name of the company||Claim Settlement Ratio|
|Life Insurance Corporation of India||98.04%|
|HDFC Life Insurance Company Limited||97.80%|
|Max Life Insurance Company Limited||98.26%|
|ICICI Prudential Life Insurance Company Limited||97.88%|
|Kotak Mahindra Life Insurance Company Limited||93.72%|
|Aditya Birla SunLife Insurance Company Limited||96.38%|
|TATA AIA Life Insurance Company Limited||98%|
|SBI Life Insurance Company Limited||96.76%|
|Exide Life Insurance Company Limited||96.81%|
|Bajaj Allianz Life Insurance Company Limited||92.04%|
|PNB MetLife India Insurance Company Limited||91.12%|
|Reliance Nippon Life Insurance Company Limited||95.17%|
|Aviva Life Insurance Company Limited||94.45%|
|Sahara India Life Insurance Company Limited||82.74%|
|Shriram Life Insurance Company Limited||80.23%|
|Bharti AXA Life Insurance Company Limited||96.85%|
|Future Generali India Life Insurance Company Limited||93.11%|
|IDBI Federal Life Insurance Company Limited||91.99%|
|Canara HSBC OBC Life Insurance Company Limited||95.22%|
|Aegon Life Insurance Company Limited||95.67%|
|DHFL Pramerica Life Insurance Company Limited||96.62%|
|Star Union Dai-ichi Life Insurance Company Limited||92.26%|
|IndiaFirst Life Insurance Company Limited||89.83%|
|Edelweiss Tokio Life Insurance Company Limited||95.25%|
Against the claim settlement ratio, here is a graph showing the claim settled vis-à-vis claim rejected –
As can be seen from the chart, Sahara India and Shriram Life had higher claim rejections and lower claim settlement ratio compared to the other life insurance companies in the market.
Top life insurers as per their claim settlement ratio
If the claim settlement ratios of life insurance companies are compared, here are the top 10 companies which have the highest claim settlement ratio.
Choosing an insurance company with a good claim settlement ratio records is a good practise.Turtlemint uses state of the art technology to provide you the best options for choosing an insurance plan by simply visiting the relevant pages linked below & choosing your insurance type. Apart from Life Insurance you can also buy Health Insurance, Two-wheeler Insurance & Car Insurance.
- Life Insurance-Term Plans
- Life Insurance – Savings & Retirement
- Two-wheeler Insurance
- Car Insurance
- Health Insurance
Choosing the right life insurance company
A life insurance policy ensures financial security in your absence and so you should ensure that you buy the best policy. To choose the best life insurance policy, choice of the best life insurance company is also important. This is where the claim settlement ratio comes into the picture. A company with a higher ratio is better than the one with a lower ratio. However, the claim settlement ratio should not be given importance alone. It should be one factor in the choice of the best policy, other features & benefits of the insurance policy should also be taken into account during comparison after choosing the relevant type of insurance policy here.
This is because of the following reasons –
- The claim settlement ratio measures the number of claims settled. It does not indicate the time taken by the insurance company to settle its claims. If the company is settling its claims after a long time, a high ratio would be of no importance. You would not get the claims quickly and easily which might have a negative impact.
- The ratio measures the claims settled in one financial year. If a claim is presented on 28th March, it might be settled in the first week of April. In such a case, the claim would be considered to be made but not settled. The claim is not reflected to be pending with the insurer.
- Besides the claim settlement ratio, the other facets of the policy should be compared. You should give importance to the coverage benefits, premium rate, policy duration, available riders, etc. to choose the best policy. Choosing a policy inferior in terms of coverage and premium over a superior policy simply because of the company’s high claim settlement ratio might not be the most prudent choice.
Choosing the right insurance policy can be a daunting and intimidating task, especially if you are a beginner, please feel free to reach out to our support team in the chat option on this webpage to help us assist you.
If you wish to browse life insurance plans yourself, visit this page & simply choose your policy requirement type along with a few details to help us show you the most relevant insurance policies
IRDA’s Claim Settlement Ratio is an important parameter when comparing life insurance companies but it should not be the only one. Shortlist a policy after judging its suitability in terms of coverage, premiums, policy term and other factors and then consider the claim settlement ratio to make the final choice.