On 15th December, 2016 IRDA published Annual Report for FY 2015-16. Let us see which is the top and best Life Insurance Company for 2017 based on claim settlement ratio 2015-16.
What is the meaning of Claim Settlement Ratio?
Claim Settlement Ratio is the indicator how much death claims Life Insurance Company settled in any financial year. It is calculated as the total number of claims received against the total number of claims settled. Let us say, Life Insurance Company received 100 claims and among that it settled 98, then claim settlement ratio is said to be 98%. Remaining 2% claims the Life Insurance Company rejected.
Based on this, we can easily assume how much customer friendly they are in dealing with death claims. However, I warn you that this claim settlement ratio is raw data.
It will not give you clear picture of what types of products they settled. They may be Endowment plans, ULIPs or Term Insurance Plans. Hence, this is not a sole criteria in judging the performance of a life insurance company.
IRDA Claim Settlement Ratio 2015-16
Below is the Claim Settlement Ratio 2015-16 or up to 31st March, 2016. I differentiated the below table with colour code for your better understanding.
Green-Claim Settlement Ratio from 90% to 100%
Yellow-Claim Settlement Ratio from 80% to 89%
Red-Claims below 79%.
You notice that among total 24 Life Insurance Companies, around 12 companies are in GREEN (Claim Settlement Ratio above 90%). Total 10 companies are in YELLOW (Claim Settlement ratio between 80% to 89%). Total 2 companies are in RED (Claim Settlement Ratio below 80%).
As usual LIC tops the list. But don’t feel happy. Let us see the claim amount settled by individual companies to arrive at best companies.
The biggest surprising factors from Claim Settlement Ratio of 2014-15 to Claim Settlement Ratio of 2015-16 are as below.
# Star Union‘s last year the claim settlement ratio was 94%. Hence, I intentionally flagged it RED. Now see this year’s result. It’s claim settlement ratio dropped to 81%. A drop of 13%.
# Reliance Life is one more big changes. Last year the claim settlement ratio was 84%. But this year, it jumped to 94%.
# PNB Met Life‘s last year’s claim settlement was 93%. But this year, it dropped to 85%. A change of 8%.
# Birla Sun Life‘s last year’s claim settlement was 95%. But this year, it dropped to 88%. A change of 8%.
# IDBI Federal Life‘s last year’s claim settlement was 76%. But this year, it increased to 85%. A change of 9%.
# Aegon Religare Life‘s last year’s claim settlement ratio was 90%. But this year, it increased to 95%. A change of 5%.
# Edelweiss Tokio‘s last year’s claim settlement ratio was 60%. But this year, it increased to 85%. A change of 25%.
# DHLF Pramerica’s last year’s claim settlement ratio was 57%. But this year, it increased to 84%. A change of 27%.
Now you noticed that new companies claim settlement ratio changing so high around 27% to 8%. Why such change? No specific answers to such big changes (either positive or negative).
So do you feel this data a reliable one? I stay with insurance company which gives me stable and consitent result than such a sway in business data.
Average Claim Settlement Amount of Life Insurance Companies in 2015-16
As I said above, the claim settlement ratio will not give you the clear picture about which type of products the insurance companies settled. However, we can assume the types of products they settled by looking at the average claim settlement amount of Life Insurance Companies in 2015-16.
Here comes the results !! LIC stands in lowest with red in colour along with Life Insurance Companies like Sahara, Reliance Life, Exide and Future Generali. What it indicating?
It shows that, even though LIC settled the highest number of claims, the majority of such claims are less than Rs.2,00,000 Sum Assured. Hence, it is indicating indirectly that LIC’s claim settlement is mainly in the category of Endowment Plans but not Term Insurance.
Average Claim Rejection Amount of Life Insurers in 2015-16
Now let us go deeper into Claim Settlement Ratio 2015-16 and try to analyse the how much amount of claims they rejected. Here, I calculated average amount as I don’t have data to check the maximum and minimum amount.
The results are as below.
You notice that Sahara’s claim rejection amount is less and then comes the LIC. LIC’s claim rejection is less because the quantum of claims it handles is HIGH but value is less. So no need to say that LIC done a great job here.
Claim Pending Status of Life Insurance Companies in 2015-16
The greatest fear for all of us is how fastly the Life Insurance Companies settle the claims. Let us now analyse the data of claims pending with Life Insurance Companies in 2015-16 and how old they are.
You notice that Kotak Life, Reliance Life, SBI Life, Shriram and LIC are leading in pending cases which are more than a year. Reasons may not be know. But it indicates that there are some issues either with insured or insurer.
I don’t want my Life Insurance Company will delay claim settlement for a year or so. In my view, it must not go beyond 6 months. But delay fears me to look at these companies.
Best Life Insurance Company in 2017
Based on the IRDA’s Claim Settlement Ratio 2015-16, which are the Top and Best Life Insurance Company in 2017? I select only five based on above data. You may differ in my view and come up with different set of ideas. But these are my choices.
- Aegon Religare
- Max Life
Few important points before jumping into selecting of Life Insurance Companies
# Claim Settlement Ratio is raw data
As I pointed above, claim settlement ratio is just a raw data. It will not gives us the specific data. Hence, never rely on this single data alone while short listing the insurance company.
# Concentrate on Product rather than company
Choose the product which suits your requirement and premium affordability. Declare the facts properly. Never hide any material facts. If all these you do, then an insurance company will have to accept your claim. Never give room of suspicious on you to reject the claim.
# Section 45 of Insurance Act will guard YOU
According to Section 45 of Insurance Act “No policy of life insurance shall be called in question on any ground whatsoever after the expiry of three years from the date of the policy, i.e. from the date of issuance of the policy or the date of commencement of risk or the date of revival of the policy or the date of the rider to the policy, whichever is later”.
It says a lot. Even if you shared wrong information or hid some material facts, then also it is purely life insurance Company’s responsibility to dig deep and find out faults WITHIN 3 YEARS ONLY. After 3 years, they cannot question. Note the period of 3 years, it is from the date of issuance of the policy, or the date of commencement of risk or the date of revival of the policy or the date of a rider to the policy, WHICHEVER IS LATER. So let us say if you took the policy today and after a few years the policy lapsed due to non-payment of premium. However, you thought to renew it again and paid all dues. In such situation, this 3-year period starts from such revival date, but not from the original policy issued date.
Read the complete details about this IMPORTANT act of Life Insurance in my earlier post at “Term Insurance-Claim Settlement Ratio no more a big criteria”.
# Disclose the facts Properly
While buying Life Insurance products, you must fill the proposal form on your own. Never allow any agent or Life Insurance Company representative to fill it. Disclose the facts properly without hiding anything. This will really help you in big way. Also, it will not give any room for insurers to reject your claim.
Do the things properly which are in your hand. Rest HOPE for the best 🙂