Insurance Regulatory Development Authority (IRDA) has recently released its Annual report for 2017-2018. 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 2017-18.
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 94 of them, the claim settlement ratio of that company would be 94%. We can also calculate Claim Settlement Ratio based on benefit/claim amount paid.
Based on IRDA’s annual report 2018, I have collated some important points as below;
Life Insurance Business in India in 2017-18
- At the end of March 2018, there are 68 insurers operating in India; of which 24 are life insurers, 27 are general insurers, 6 are Standalone health insurers exclusively doing health insurance business and 11 are re-insurers including foreign reinsurers branches and Lloyd’s India.
- In life insurance business, India is ranked 10th among the 88 countries, for which data is published by Swiss Re. India’s share in global life insurance market was 2.76 percent during 2017.
- The life insurance penetration had gone up from 2.15 percent in 2001 to 4.60 percent in 2009. Since then, it has exhibited a declining trend up to the year 2014. There was a slight increase in 2015 reaching 2.72 percent, remained same in 2016 and increased to 2.76 in the year 2017.
- Life insurance industry recorded a premium income of Rs 458809.44 crore during 2017-18 as against 418476.62 crore in the previous financial year, registering growth of 9.64 percent
- The Private sector insurers posted 19.15 percent growth (17.40 percent growth in previous year) in their premium income, LIC recorded 5.90 percent growth (12.78 percent growth in previous year).
- Single premium products continue to play a major role for LIC as they contributed 33.48 percent of LIC’s total premium income (32.71 percent in previous year). In comparison, the contribution of single premium income in total premium income during 2017-18 was 15.58 percent for private insurance companies (14.89 percent in previous year).
- Unit-linked products (ULIPs) registered a growth of 22.72 percent premium from Rs 52845.26 crore in 2016-17 to Rs 64850.90 crore in 2017-18. On the other hand, the growth in premium from traditional products was at 7.75 percent.
- On the basis of total premium income, the market shares of LIC decreased from 71.81 percent in 2016-17 to 69.36 percent in 2017-18. The market share of private insurers has increased from 28.19 percent in 2016-17 to 30.64 percent in 2017-18.
- During the financial year 2017-18, the life insurance industry reported a profit after tax of Rs 8511.99 crore as against Rs 7727.89 crore in 2016-17. Out of the twenty-four life insurers in operations during 2017-18, nineteen companies reported profits. The LIC of India
- reported a profit after tax of Rs 2446.41 crore i.e. an increase of 9.62 percent over Rs 2231.74 crore in
Individual Death Claims Data (2017-18)
- In the year 2017-18, the life insurance companies had settled 8.28 lakh claims on individual policies, with a total pay-out of Rs 14623.82 crores. The number of claims repudiated/rejected was 9286 for an amount of Rs 532.21 Crores.
- The Claim settlement ratio of LIC was at 98.04 percent as at 31.03.2018 when compared to 98.31% as at 31.03.2017.
- For private insurers, settlement ratio had gone up by 1.52% at 95.24% during the financial year 2017-18 when compared to 93.72% during the previous year.
Latest IRDA Claim Settlement Ratio 2017-18 data
Below is the latest Life insurance death claim settlement ratio based on IRDA’s 2017-18 annual report;
How to read above Claim Settlement Ratio Table?
Let me now 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 2017-18 the total number of claims (no of policies) received by LIC of India are 7,39,082. This is inclusive of last period’s pending claims (if any) and this period’s (2017-18) claims that are booked or intimated.
7,24,596 policies out of total 7,39,082 policies were settled during the period 2017-18. This translates into a death claim settlement ratio of 98.04% for LIC.
The total claim amount (Benefit Amount) paid on LIC policies during 2017-18 was Rs 11,379.40 Cr. Out of which Rs 10,747.53 crore worth of claims were settled.
As per the above explanation LIC gets 98.04/100. So, what happened to 1.96% (100-98.04%) 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 2017-18
- Max Life
- Life Insurance Coporation of India (LIC)
- TATA AIA Life
- ICICI Prudential Life
- HDFC Standard Life
- Bharati Axa Life
- Exide Life (Previously ING Vysya Life)
- SBI Life
- DHFL Pramerica
- Aditya Birla Sunlife
Important Points to ponder upon
- The claims settlement ratio does not talk about the type of policies i.e., whether the claims received were 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 : Best Term Insurance Plans).
- In fact, you can buy a Life Insurance plan from any Insurer of your choice. But, 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 of the insurance companies cite incomplete documentation or concealment of facts as a reason for rejecting the claims. Hence, while buying a life insurance it is of utmost importance that you furnish accurate information and ensure that all paper work is in place.
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(Image courtesy of Stuart Miles at FreeDigitalPhotos.net) (Source & Reference : IRDA Annual Report 2017-18) (Post first published on 11-January-2019)