Insurance Regulatory Development Authority has released its Annual report for 2013-2014 on 8th January,2015. Based on the annual report I had listed down the best Life Insurance companies. The criteria for the selection is CLAIM SETTLEMENT RATIO 2013-14.
What is Claim Settlement Ratio in Insurance?
Claim settlement is one of the most important services that an insurance company can provide to its customers. Insurance companies have an obligation to settle claims promptly. For instance, if a life insurance company receives 1000 death claims and settles 980, the claim settlement ratio of that company would be 98%.
Best Life Insurance Companies based on Latest Claim Settlement Ratio 2013-14
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How to read IRDA Claim Settlement Ratio Table?
Let me explain on how to understand the numbers given in the above table. Let us consider Sl.No 1 which has data regarding LIC. During the period 2013-14 the total number of claims (no of policies) received by LIC of India are 7,60,344. This is inclusive Last period’s pending claims and this period’s (2013-14) claims that are booked or intimated.
7,46,212 no of policies out of total 7,60,344 policies were settled during the period 2013-14. This translates into a claim settlement ratio of 98.14% for LIC.
The total claimed amount (Benefit Amount) on LIC policies during 2013-14 was Rs 8,905 crore. Out of which Rs 8,475 crore worth claims are settled.
What is Claims repudiated, Claims Pending & Claims Written Back:
As per the above explanation LIC gets 98.14/100. So, what happened to 1.86% (100-98.14%)of claims (no of policies)?
These claims fall under the category of claims repudiated or pending or written back. (Repudiated means Claim rejected. Pending are yet to be settled and Written back claims are ‘sent back for more information’).
Important Points to ponder upon:
- LIC of India, ICICI Prudential Life and HDFC Life are the top Life Insurance companies in terms of best Claim Settlement Ratio (2013-14)
- DLF Pramerica and Edelweiss Tokio Life Insurance companies have higher number of Repudiated Claims
- LIC, ICICI and HDFC were the toppers in 2012-13 also.
- The claims settlement ratio does not talk about the type of policies i.e., whether the claims that were received are Term or endowment or money back plans.
- New Life Insurance Companies will generally have Low Claim Settlement Ratios
- As per IRDAI’s annual report the industry’s settlement ratio had slightly increased to 96.75% in 2013-14 from 96.41% in 2012-13 and the repudiation ratio had remained almost at the same level of 2.08% in 2013-14 as in 2012-13 (2.10%).
- Before buying any type of plan, do look at the company’s Claim Settlement Ratio
- Do not hide any facts while filling the proposal form. This will ensure that your claim (after the unfortunate event)is settled.
- Though Claim Settlement record is one of the important factors while choosing your life insurance plan, it is advisable to go for only Term Insurance. You can opt for a Term plan based on the claim settlement record. The other deciding factors can be cost of premium, features, optional riders, quality of service and your comfort level with the Brand.
Most companies cite incomplete documentation or concealment of facts as a reason for rejecting claims. Hence, while buying a life insurance it is of utmost importance that you furnish accurate information and ensure that all paper work is into place. Give importance to claim settlements record and do not get swayed away by higher returns / tax benefits alone.
( Image courtesy of David Castillo Dominici at FreeDigitalPhotos.net)