December 18, 2019

IRDA Claim Settlement Ratio 2018-19 | Best Life Insurance Company in 2020

IRDA published its annual report on 16th December 2019. Let us see the IRDA Claim Settlement Ratio 2018-19 and also which is the Best Life Insurance Company in 2020.

Note:-Refer my latest post regarding Health Insurance Companies Claim Ratio “Health Insurance Incurred Claim Settlement Ratio 2018-19“.

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 2018-19

Below is the IRDA Claim Settlement Ratio 2018-19 or up to 31st March, 2018. I differentiated the below table with colour code for your better understanding.

IRDA Claim Settlement Ratio 2018-19

You notice that among total 24 Life Insurance Companies, around 20 companies are in GREEN (Claim Settlement Ratio above 95%). Earlier it was 11 companies. Only three companies are in yellow (claim settlement ratio above 90% but below 95%) and one is in red (Less than 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 2018-19

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 2018-19.

Here come the results !! LIC stands in lowest with red in colour along with Life Insurance Companies like Bajaj Allianz, Exide, Future Genereli, IDBI Federal, India First, Max Life, Reliance, Sahara, SBI Life, Shriram, Star Union. 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 2018-19

Now let us go deeper into IRDA Claim Settlement Ratio 2018-19 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.

IRDA Claim Settlement Ratio 2018-19 - Average Claim Rejection Amount

You notice that Sahara’s claim rejection amount is ZERO. The reason is that IRDA Annual Report itself mentioning it as ZERO. 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 along with other players. However, you notice that as usual HDFC and ICICI tops the list.

Top 10 Best Life Insurance companies in India for 2020

Based on the IRDA Claim Settlement Ratio 2018-19, which are the Top and Best Life Insurance Company in 2020? I select only ten based on the above data. You may differ in my view and come up with a different set of ideas. But these are my choices.

  1. LIC
  2. HDFC Standard Life
  3. ICICI Pru Life
  4. Max Life
  5. Tata AIA Life
  6. Aegon

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.

69 Comments

  1. Dear sir
    Most of the top term insurers like hdfc, icici,max life are not doing medical test
    They are giving the policy w/o medical test or after telemedical questioning,
    They are saying that for a cover of 1cr and graduate person they are waiving the medical tests.
    Should I not buy policy from these companies due to no mandatory medical test and go for different companies which conduct medical test although they are not suiting my plan or having less claim settlement ratio

    Reply
    • Dear Pramod,
      You can buy but make sure that you disclose all the facts properly.

      Reply
  2. Dear Sir,
    I want to buy a term insurence of 1cr my age is 32
    Slightly obese, I am getting confused with the riders many companies have different varities of riders, can u guide what are the usefull riders I should have in my term insurence I have come across the following ones
    1 critical illnesses
    2 accidental death benefit
    3 accidental disablities
    4 waiver of premium
    Is it really usefull to have the riders in the policy?

    Reply
  3. I brought term plan from Aegon life and Bharti AXA . How this company work .is it safe.

    Reply
    • Dear Deba,
      All are equally good and bad. The only thing that is in your hand is to declare the facts properly. You are by mentioning MSME, trying to interpret that all business loans are also under this moratorium. Please check with your bank.

      Reply
  4. Is Aegonlife termplan is better?
    I here ,that after three years not to reject claim to any reason?

    Reply
    • Dear Krishnamurthy,
      How can I assume and GUARANTEE you that after 3 years they will not reject the claim?

      Reply
  5. I’m planing for a Term insurance plan. I have friends who smokes, probably of me becoming a passive smoker is more. Is this will impact claim rejection?

    Reply
    • Dear Diwaharan,
      If report confirms your smoking, then obviously it will impact your premium.

      Reply
    • no your claim will not reject.

      Reply
      • Hi,

        Please tell me if you were me. which insurer would you choose.
        Age 26 Years
        Premium amount is not a concern.
        for 1 Cr amount

        Reply
        • Dear Sagar,
          How can my financial life is the SAME as yours? 🙂

          Reply
  6. My organization gives a cover of 1crore for air accident death and 30lakhs for road accident death.. Should I disclose while buying term insurance and upto what age should I cover myself… Many companies cover upto 70,75,85,99…please guide

    Reply
    • Sir, Me Term insurance lene ki soch raha tha. Mere kuch doute he i hope aap solve karonge.
      1) HDFC, MAX, TATA AIA Inmese Tata AIA ka premium thoda kam he, lekin TATA AIA COM. se lena thik hoga kya?
      2) Basic insurance without critical illness sahi hoga kya?

      Reply
      • Dear Akshay,
        1) If a premium is a concern, then go with the one which offers you the least.
        2) Yes.

        Reply
  7. Dear Sir,
    Is term Rider is useful or should I go for pure term plan? I m 44 & smoker.

    Reply
  8. Sir, I doubt why the icici company is not giving even after requesting so much.
    and the reason doesn’t even tell
    and feel uncomfortable,

    Reply
    • Dear Kishor,
      If you are uncomfortable, then better switch to the insurer.

      Reply
  9. Hello, Sir
    The company is not giving me a soft copy of the medical examination report (MER) fielded form,
    Have given medical report but are not giving MER form
    Should i keep the policy on or not

    Thanks

    Reply
      • Sir, I doubt why the icici company is not giving even after requesting so much.
        and the reason doesn’t even tell
        and feel uncomfortable,

        Reply
  10. Do we need to declare the Corporate term insurance also while buying personal term insurance? The corporate term insurance is not fixed(neither the insurance company nor the amount as it is usually linked to pay package) and the employer can change the policy terms in future. Moreover, the employee does not pay anything for the corporate term insurance and this is valid only during the employment period. In this scenario, do we need to disclose corporate term insurance’s details in our personal insurance’s application? My agent skipped this information in the application.

    Reply
  11. Dear Basu Ji, isn’t it a bad thing that HDFC and Icici have high average claim rejection amount?

    Another related question is, if someone has a sum assured of 1cr, can the company pay only 50L and reject 50L in case of claim?

    Reply
    • Dear Sunil,
      Regarding the claim rejection, yes it is always bad. No, they can’t partially accept the claim. Either they have to reject it or accept it fully.

      Reply
  12. I m 33 yr want 85yr coverage
    Which is better for me Tata aia or max life or hdfc life?
    Premium. Low in tata and max life than hdfc

    Reply
  13. According to my calculation average claim amount settle from IRDA report for HDFC Life and ICICI Pru is 4.5 lac ( 57700/12822) and 7.73 lac (82700/10672), but you have mentioned approx. 12 lac and 16 lac. How you get it.

    Same for claim amount rejection, my figures are not matching for only HDFC and ICICI.

    Please let me know how you have calculated.

    Reply
      • For HDFC and ICICI only. For remaining my figures are near to yours.
        It will be easy for everyone if you share page number of IRDA report from where you have extraced the data. I calculated it from data given in page no. 154.

        Reply
          • Thank You for solving my numerous doubts and correcting the bar graph.

            Reply
      • Yes only for HDFC and ICICI. I had calculated from data given at page no. 152 of IRDA report 2018-19.
        Please rectify and mention the page no. from where you have calculated, it will help to every readers to calculate by their own independently.

        Reply
  14. Shall i go with Tata AIA ? Is it good company to buy term plan?

    Reply
  15. great amount of information. this might be available on different sites and different people might agree disagree. still it solved my purpose to have an overlook at one go for the different data which if we try to find in the annual report of the IRDAI is very difficult.

    thankyou so much Mr. Basavaraj.

    Reply
  16. Dear Mr Basavaraj,

    For LIC Jeevan Anand (149) plan, does the policy gets lapsed the moment premium payable due date is missed? Since mine is yearly payable, I am thinking to postpone the payment for 20 days and since policy would be in grace period only, my LIC guy said it is not lapsed when in grace period. Please share your thoughts.
    Thanks,
    Raju

    Reply
  17. Aegon’s CSR and avg claim settlement amount is high. difference between % of CSR and avg settlement amt is less, still you have placed this company at 5th position, why?

    Reply
    • Dear Praveen,
      Higher CSR and higher claim settlement amount a NEGATIVE?

      Reply
      • Even I have this question? I think the author didn’t really get what the original questioner asked. Let me ask again:
        Question:
        In your list of top 6 best insurance companies, why Ageon is at the bottom though it ouran the other 5 in terms of claim amount settled, csr, etc?
        Thanks in advance!

        Reply
        • Dear Charan,
          I already said, as per you I may be biased and it does not mean others are WORST. Among all, I also chosen Aegon. But I least bother who is TOP or BOTTOM in my 6.

          Reply
  18. I have taken HDFC Life Insurance and opened an EIA account. and you are not giving hard copy policy documents.
    Speaks All documents will be received on email.
    So it will be ok sir
    That i should take hard copy policy
    What to do sir

    Reply
    • Dear Kishor,
      You have an option to choose both. Choose the one which comforts you.

      Reply
  19. What will happen to the life insurance policies if the insurer does not exist in the future? For example a life insurance policy is for 40 years with HDFC life and in the meanwhile the HDFC life gets bankrupt or closed for some reason, how will I be covered ?

    Reply
  20. Kindly reconsider your findings from the data that LIC settled mostly endowment type of policies and not term assurance. This I think is going little harsh on LIC. The best advice to customers may be to be completely honest while taking the policy.

    Reply
    • Dear Prakash,
      It is not harsh but a reality. If it can’t be digestible for few FANS of LIC, then it is their problem.

      Reply
      • correct ,,,hahahahhaa

        Reply
  21. Hi Sir, Im 36 yrs old . i recently bought icici pru i protect smart policy for sum 50 lakhs and term 24 yrs. They have not conducted medical test..I even requested them for physical medical test but they activated the policy with tele medicals and assured that this will not affect claim in future. Is it advisable to consider this policy without medical test or shall i cancel. ? Share your thoughts pls.

    Reply
    • Dear Shravan,
      If you disclosed the facts properly, then no need to worry.

      Reply
  22. Hi Sir,

    But the LIC Premium is almost thrice compare to other insurance companies
    What u suggest on this?

    Regards,
    Vinod

    Reply
    • Dear Vinod,
      Here, I am not defending any particular company. As I pointed above, CSR is raw data. Your decision to buy a term life insurance MUST NOT BE based on CSR.

      Reply
      • Dear Mr. Vinod

        I fully agree on your point that CSR is a raw data. But, have you any practical data to prove that reason behind higher claim settlement ratio of LIC is only because of High volume of Endowment policies.

        I think you should study a bit more on penetration of Term Insurance policies in India. It’s still very low. Definitely the number of claims of Term Insurance policies will be very less.

        One the Indicator which can be a reflector and eye opener for the betterment of customers is The Difference between the % of Number of claims settled to the % of Benefit Amount settled. Larger the Gap, less the benefit transferred.

        Reply
        • Dear Rahul,
          “But, have you any practical data to prove that reason behind higher claim settlement ratio of LIC is only because of High volume of Endowment policies.”-Check their average claim settlement amount, which I shared above. It is less than Rs.2 lakh. This itself shows that they mainly settled endowment kind of products.
          I agree that claim on term life insurance MAY be less. However, with CSR data, we can’t differentiate the data.
          “The Difference between the % of Number of claims settled to the % of Benefit Amount settled. Larger the Gap, less the benefit transferred.”-Obviously and that is the reason I calculate the average amount settled to make is understandable the quantum of the sum assured policies they settled.

          Reply
    • Now with LIC’s Jeevan Amar and Tech Term, it is not so. Also, don’t depend on the above data. The fact shown above is far beyond reality.

      LIC is one which covers the poorest of poor in the country. Sum Assured starts from as low as 5000.

      Nobody is having any data on Indivisual Term Insurance claim settlement. Go with the best and choose wisely

      Reply
    • Dear Raj,
      I never said that CSR is a pointer to buy Life Insurance. Here, I just shared the data and at the end cautioned what you have to follow.

      Reply
  23. Thanks for sharing this it will gonna help

    Reply
  24. Hi sir, Thanks for the detailed information. However i couldn’t find apollo Munich in the list. Could you please advice. I have taken apollo Munich based on the article written in 2018.

    Reply
    • Dear Sampath,
      This post is related to Life Insurance Companies.

      Reply
      • Oh Sorry Sir!! I missed it. Thank you . Also please share the health insurance analysis.

        Reply

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