IRDA published its annual report on 4th January 2018. Let us see the IRDA Claim Settlement Ratio 2016-17 and also which is the Best Life Insurance Company in 2018.
Note:-I published the health insurance data also. Please refer “IRDA Incurred Claim Ratio 2016-17 | Best Health Insurance Company in 2018“.
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 a 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 criterion in judging the performance of a life insurance company.
IRDA Claim Settlement Ratio 2016-17
Below is the IRDA Claim Settlement Ratio 2016-17 or up to 31st March, 2017. I differentiated the below table with colour code for your better understanding.
The same one I tried to show in a bar chart for your easy understanding. Here also I used the colour code and they are as below.
Green-Claim Settlement Ratio from 95% to 100%
Yellow-Claim Settlement Ratio from 90% below 95%%
Red-Claims below 90%.
You notice that among total 24 Life Insurance Companies, around 8 companies are in GREEN (Claim Settlement Ratio above 95%). Total 11 companies are in YELLOW (Claim Settlement ratio between 90% to 95%). Total 5 companies are in RED (Claim Settlement Ratio below 90%).
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.
Average Claim Settlement Amount of Life Insurance Companies in 2016-17
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 2016-17.
Here come the results !! LIC stands in lowest with red in colour along with Life Insurance Companies like Sahara, Reliance Life, Exide and Future Generali. What is 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 2016-17
Now let us go deeper into IRDA Claim Settlement Ratio 2016-17 and try to analyze 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 2016-17
The greatest fear for all of us is how fastly the Life Insurance Companies settle the claims. Let us now analyze the data of claims pending with Life Insurance Companies in 2016-17 and how old they are.
You notice that Future Genereli, SBI Life, Shriram and LIC are leading in pending the claims for more than a year. Reasons may be unknown to us.
Best Life Insurance Company in 2018
Based on the IRDA Claim Settlement Ratio 2016-17, which are the Top and Best Life Insurance Company in 2018? I select only five based on above data. You may differ in my view and come up with a different set of ideas. But these are my choices.
- 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 give us the specific data. Hence, never rely on this single data alone while shortlisting 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 a 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 a 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 🙂