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:-
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.
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.
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.
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.
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.
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.
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.
# 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.
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View Comments
ok. Thanks for the precious advice.
Dear Sir,
I am Manish, planning to take two term plan with two different insurance companies, will it be ok or may create any issue? Please suggest.
I have a by born skin disease which cannot be cured as per the doctors, will it impact any issuance of the term plan.
Please guide.
Thanks.
Dear Manish,
There is no logic in splitting your Term Life Insurance. Better to buy with one insurer. I don't think the skin disease is an issue. However, better you declare it.
I am working on Tanker ships in merchant Navy . Is any special disclosure required in such cases bcs of it being considered high risk job? If yes , then how to disclose it online. Policybajar does not have any such provision in their app. I want to be very sure to avoid any issues later on. I have nothing to hide. I am non smoker .
Dear Anuj,
In the proposal form, you can mention. However, if you already purchased it, then better to send an email to the insurance company about your job profile.
Dear sir I wanna take term plan of bajaj allianz is it ok because my age is 33 and other plan are costly so I wann choose it please tel me bajaj allianz insurance is ok or not
Dear Praveen,
If the price is the only criteria, then there are many few products than Bajaj. Check properly.
My income is 10 lacs annually they say I cannot get more than 2cr term plan,so I decided to take multiple policy from various different companies but one of the marketing agent told me if I take multiple policy only any one will be cashed out by the nominee . Is this true?i am looking for 7cr term policy .
Dear Abhishek,
Whether you shared the existing policy details while buying the new one? If yes and still the insurers issued, then no issues. If not, then it's a breach of trust from your part and they may reject.
Is such data available for health insurance? Which company has the highest settlement ratio of health insurance claims - total and as a % of claim amount?
Respected sir.,I am 49 yrs.old.I want to purchase a term insurance policy from LIC.for a duration of 15 yrs.I used to smoke but recently (5 months)Iget rid of that practice.Will it impact on the primium? Should i disclose it while i buy it?
Dear Prakash,
Better to disclose.
hi but can we make decision basis on mean of every company as i can see hdfc and icici has paid more than 500 crore and companies like edelweiss, aegon has not crossed even 100 crore claim mark .
if you see the insurance companies get renewal premium plus everyday they get sales and unclaimed amount and not every policy get issued in 10 days more than %50 of the policy get issued after 10 days depending on the medical history so how come this calculation work.
instead i want you to make a chart on the companies who are the highest payer constantly.
Dear Mohan,
How can you assume that they settled which type of policies?
Very informative blog on Insurance.
My question here is
If income loss happened due to accident then which company provide such insurance & 2nd for critical illness?
Dear Waryam,
Accidental insurance products have such features.
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
Dear Pramod,
You can buy but make sure that you disclose all the facts properly.