Insurance Regulatory Development Authority (IRDA) has released its Annual report for 2015-2016 on 15th December, 2016. Based on the annual report, I had listed down Top 10 Best best Life Insurance companies. The criteria for the selection is Individual Death Claim Settlement Ratio 2015-16.
What is Death Claim Settlement Ratio w.r.t Life 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 100 death claims and settles 95, the claim settlement ratio of that company would be 95%. We can also calculate Claim Settlement Ratio based on benefit/claim amount paid.
Based on IRDA’s annual report 2016, I have collated some important points as below;
Life Insurance Business in India in 2015-16
- The share of life insurance business in India was at 79% while that of non-life insurance business was at 21 %.
- India’s share in global life insurance market was 2.24% during 2015 where as it was 2.08% in 2014.
- At the end of March 2016, there are 54 insurers operating in India of which 24 are life insurers, 24 are general insurers and 5 are health insurers exclusively doing health insurance business. In addition, GIC is the sole national re-insurer.
- The Life insurance penetration in India saw a slight increase in 2015 reaching 2.72 % when compared to 2.6% in 2014.
- Life insurance industry recorded a premium income of Rs 3,66,943.23 crore during 2015-16 as against Rs 3,28,102 crore in the previous financial year, registering growth of 11.84%.
- During 2015-16, the growth in renewal premium was 6.20 per cent (10.72 per cent in 2014-15). First year premium registered a growth of 22.53 % in comparison to a decline of 5.81 % during 2014-15.
- Unit-linked products (ULIPs) registered a growth of 12.62 percent premium from Rs 41,617.80 crore in 2014-15 to Rs 46,871.58 crore in 2015-16. On the other hand, the growth in premium from traditional products was at 11.72 per cent, with premium Rs 3,20,071.65 crore as against Rs 2,86,484.20 crore in 2014-15.
- On the basis of total premium income, the market share of LIC decreased from 73.05 per cent in 2014-15 to 72.61 per cent in 2015-16. The market share of private insurers has increased from 26.95 per cent in 2014-15 to 27.39 per cent in 2015-16.
Life Insurance : Death Benefits paid in 2015-16
- In the year 2015-16, the life insurance companies had settled 8.54 lakh claims on individual policies, with a total payout of Rs 12,636.66 crore.
- The number of claims repudiated/rejected was 15,157 for an amount of Rs 736.51 crore.
- Settlement ratio of LIC had increased to 98.33 percent during the year 2015-16 when compared to 98.19 percent during the previous year.
- The industry’s settlement ratio had slightly increased to 97.43 percent in 2015-16 from 96.97 percent in 2014-15.
Latest IRDA Claim Settlement Ratio 2015-16 data
Below is the latest individual death claim settlement ratio based on IRDA’s 2015-16 annual report;
How to read above 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 2015-16 the total number of claims (no of policies) received by LIC of India are 7,61,983. This is inclusive of last period’s pending claims (if any) and this period’s (2015-16) claims that are booked or intimated.
7,49,249 policies out of total 7,61,983 policies were settled during the period 2015-16. This translates into a death claim settlement ratio of 98.33% for LIC.
The total claimed amount (Benefit Amount) on LIC policies during 2015-16 was Rs 10,137 Cr. Out of which Rs 9,690 crore worth of claims were settled.
As per the above explanation LIC gets 98.33/100. So, what happened to 1.67% (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.)
Top 10 Best Life Insurance Companies based on Claim Settlement Ratio 2015-16
- The claim settlement ratio of LIC has increased slightly to 98.33% from 98.19%.
- The second place has again been retained by Max life with CSR of 96.95% in 2015-16.
- TATA AIA Life insurance
- ICICI Prudential Life insurance
- Aegon Religare
- HDFC Standard Life
- Reliance Life’s claim settlement ratio has increased considerably 83.84% to 93.82%
- SBI Life
- Canara HSBC OBC Life insurance
- Bajaj Allianz Life
Important Points to ponder upon
- The claims settlement ratio does not talk about the type of policies i.e., whether the claims that were received are Term insurance plans or endowment or money back plans.
- Before buying any type of plan, do look at the company’s Claim Settlement Ratio. But kindly note that Claim ratio is just one of the factors and not THE factor when buying a Life Insurance Policy.
- 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. (You may like reading : Top 7 Best Term Insurance Plans).
- Do not hide any facts while filling the proposal form. This will ensure that your claim (in any unfortunate event happens) is settled.
- As per the recent amendment to Section 45 of the Insurance Act, If your policy is 3 yrs old, no matter what happens, the life insurance company will not be able to deny the claims. So, your life insurance company has only 3 years in hand to reject the policy based on any mis-representation or mis-statement. Once 3 policy years are completed then the life insurance company has to settle the claims and can not reject them.
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 Stuart Miles at FreeDigitalPhotos.net) (Source & Reference : IRDA Annual Report 2015-16) (Post published on 21-December-2016)