IRDA Life Insurance Claim Settlement Ratio 2021

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The majority of Life Insurance Companies nowadays luring the buyers based on the IRDA Life Insurance Claim Settlement Ratio. Let us see the IRDA Life Insurance Claim Settlement Ratio 2021 based on the Annual Report 2019-20.

Note:- Are you looking for right choice of Term Life Insurance for you? Then refer our latest post “Top 5 Best Term Insurance Plans in India 2021“.

What is the meaning of Claim Settlement Ratio?

Claim Settlement Ratio is the indicator of 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 those, it settled 98, then the claim settlement ratio is said to be 98%. The 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 the sole criterion in judging the performance of a life insurance company.

IRDA Life Insurance Claim Settlement Ratio 2021 – Annual Report 2019-20

Below is the IRDA Claim Settlement Ratio 2019-20 or up to 31st March, 2020. Few points to notice from this Annual Report are as below.

# Claim settlement ratio of LIC was at 96.69% as at March 31, 2020, when compared to 97.79% as at March 31, 2019. The proportion of repudiations has increased to 0.81% in 2019-20 compared to that of 0.43% in the previous year.

# For private insurers, the settlement ratio had increased to 97.18% during 2019-20 when compared to 96.64% during the previous year. The proportion of repudiations came down to 2.42% in the year 2019-20 when compared to that of 2.83% in the previous year.

# The industry’s settlement ratio declined to 96.76% in 2019-20 from 97.64% in 2018-19 and the repudiation ratio increased to 1.02% compared to that of 0.74% in 2018-19.

# Claims of Life Insurers is as per the below table.

Claims of Life Insurers 2019-20

# Death Claims of Life Insurers for FY 2019-20 can be classified as below.

Death Claims of Life Insurers 2019-20

You noticed that claim rejection is high in LIC along with uncliamed and claims pending ratio also.

# The below chart will show you the duration wise break up of pending claims of Life Insurers during FY 2019-20.

Note here that pending claims for less than 3 months is high for private insurers. However, it is high in the case of LIC for the 3-6 months period. I am not sure the reasons for such a huge delay from LIC.

# Let us now look into the complaints side. The highest complaints about mis-spelling are against the banks. Then comes the brokers. The break up is as below. BEWARE OF BANKERS!!

# Causes of Mis-Selling are listed as below:-

a. Incorrect explanation of product features and benefits by sales person sourcing the business.
b. Incorrect premium paying term and policy term is explained to policyholder especially in cases
where regular premium paying product is sold as single premium product.
c. Policy is sold to gullible prospects assuring Loan / Bonus / Medical Benefits/ Gold coins/Mobile Towers/other benefits upon purchase of insurance policy.
d. Tampering, forgery of proposal/ other related documents.
e. High attrition rate amongst Sales team
f. Pressure on the sales person to meet sales target.
g. Free look cancellation requests are rejected by sales personnel who are not authorized to take such decisions.
h. Splitting of policies wherein multiple policies are issued to the same proposer at the same time.

i. Life Insurance policies are sold only as Tax saving/ Investment plans.
j. Sales personnel lack proper knowledge /are inadequately trained, thereby recommending unsuitable products to prospects.
k. Improper/Incorrect financial needs assessment of Prospect is done while sourcing the policy by the sales personnel.
l. Charges under the policy and lock in period are not properly explained while sale of Unit Linked Insurance Policies.
m. Churning of policies.
n. Contact numbers updated on the proposals are tampered, which restricts the success of the pre-issuance verification calls.
o. Lack of awareness on insurance on the policyholder’s part thus being misled into buying the insurance policy.
p. Policyholders failing to cross-check details.
q. Financial Problems/incapacity of the policyholder to pay future premiums.
r. Bundling and making it conditional for availing bank services.
s. Sale without proper consent of customer t. Insurance is sold to clients who were not present in India at the time of sourcing along with premium being funded without customer consent through bank accounts held with the bank.
u. Instigation by employees, advisor, channel partners, others who are no longer sourcing new business for the insurer.

I am sharing these reasons mainly to make you aware of the ways mis-selling may happen in the Life Insurance space.

Let me share you now the IRDA Life Insurance Claim Settlement Ratio 2021.

IRDA Life Insurance Claim Settlement Ratio 2021

You noticed that 20 out of 24 companies have a claim settlement ratio of more than 95%. As I pointed above, LIC’s claim settlement ratio reduced compared to private players.

Average Claim Settlement Amount of Life Insurance Companies in 2019-20

It is hard to find what type of products these insurers settled. Hence, I always try to look into the average claim settlement amount of these insurers. Even though it may not give us a clear picture, but a better indicator of the types of policies they settled.

If you look at this data, then you noticed that Aegon is a topper and Sahara with LIC is at lower. LIC’s average claim settlement amount is Rs.1,74,403. It means the majority of the claims are traditional plans.

Top 10 Best Life Insurance companies in India for 2021

Based on the IRDA Claim Settlement Ratio 2019-20, which are the Top and Best Life Insurance Company in 2021? 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
  7. SBI Life
  8. Aditya Birla Sunlife
  9. Bajaj Allianz
  10. Bharti Axa

Few important points before jumping into selecting of Life Insurance Companies

# Claim Settlement Ratio is raw data

As I pointed above, the claim settlement ratio is just 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.

Refer our latest posts:-

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43 Responses

  1. Dear Sir,

    I am looking for term plan. My question are as below:-
    1. is it good to go for Basic term plan or basic term plan + critical care illness?
    2. Till How many age should a Term Plan should cover.
    3. ICICI is telling that if I pay premium in limited time say within 10 years then it will save 29 percent compared to normal pay. Should I opt for limited pay or there is some trick.
    4. Last which one will be good for opt out of ICICI / Max/ Tata AIA.

    Please help in regarding same..

    1. Dear Manish,
      1) Avoid riders.
      2) Up to your working age
      3) They are not giving anything for free. They are getting your premium in advance and that’s why they are giving you a discount. Such a discount is not FREE.
      4) All are equally good and bad.

  2. Hello Sir,
    My age is 32 yrs, want to buy a term plan.
    But I am confuse between HDFC life and Max Life. Max life has higher CSR and low premium compare to HDFC life. While HDFC life is bigger brand and more branches. Can you help me to choose better option for term plan.

    1. Dear Prashant,
      Both are equally good and bad. Go with the one which is affordable for you and features matching your requirement.

  3. Dear Sir/Mam,

    I am medically covered under Corporate Family Health Policy. But recently, being 38+, I think I need a Family Insurance policy of at least 15L for lifetime. I came across so many policies in Policy Bazaar for the past 10 days – I read out everything – but still could not finalise which one would be best – depending on cashless claim settlement, illness covered & stability of the company after 30-35 years

  4. Dear Sir,

    Is there any maximum limit for the Sum Assured for an individual in Term Insurance Policies or any individual is free to choose the Sum Assured (assuming that there are no rules or regulations to limit the Death Benefit when a claim is made though the Sum Assured may be a high value)?

    1. Dear Ganesh,
      There is no maximum limit. However, insurance companies issue the policy based on their own underwriting rules and arrive at your human life value. Hence, a person whose earning Rs.1 lakh a year can’t opt for Rs.5 Crore policy as his human life value (in case of death) is less than Rs.5 crore.

  5. Sir, currently I have health insurance from care ( former religare) for last 5 yrs. I am considering to move to other insurer. Please suggest.

  6. Hi sir,
    I bought a icici term insurance
    But its writeen over there u will get 7% or 105 or sum assured so just want to know what my family will get in case incidejt take place in future.

    Regards
    Shahil kapoor

  7. Sir, I recently found Max Bupa health insurance, ReAssure policy for 10 lakhs and top up of 90 lakhs for 2A+1C. My age is 46y. Request you to please suggest whether its worth going ahead?

  8. Thinking to cancel hdfc 3d life.

    Bought in 2019 without including any option like critical illness ,premium waiver, disability, accidental rider.
    premium 14200( paid 2 premium)
    limited pay 10 years.
    age 33 years.
    policy term till age 65.

    I was not such aware regarding thse option or you can say i ignored these during buying policy. I can not change this now.

    so i am thinking to discontinue hdfc 3d life and thinking to buy
    lic tech term with rider option or max/tata with critical illness, accidental rider.

    Just bcoz i did not added the options. i am thinking to switch.

    Should i go ahead with my thought.? what do you say on this.

  9. Lic or HDFC Click 2 protect life which one to choose. Please suggest based on overall aspect.

  10. there is no point in considering Average claim settled amount until unless IRDA publish separate claim settle data for Term Insurance product (LIC average amount will always be low considering company sells is more on endowment product )

  11. Where did you get the data for average claim amount settled? can you please provide the report source/link.

  12. Thanks you very much for this detail.

    I wanted to buy Term Insurance. I am confused between LIC – Tech term plan vs ICICI pru iProtect smart. Reason to buy from ICICI is premium waiver in case of disability and critical illness cover but they has lot of term and condition/Exclusions to even to get claim at required time in future, however in LIC there is no exclusion except suicide but no waiver option and critical illness benefit.

    At least, my main focus is to get full claim amount if scenario came across in future. Hoping that which company will not reject my claim only on the basis of term & conditions
     
    Which is the better LIC Term Plan or ICICI iProtect smart term plan?

      1. Thank you Basavaraj,

        My main concern is that claim should get passed, if needed in future. On which company I can believe – LIC or ICICI?

          1. It totally make sense that no one can guarantee.

            While moving forward, after disclosing all facts truthfully in the form. By looking other side of facts that one must NOT willingly and deliberately reject the claim. Shall I consider both ICICI and LIC on same place Or Can I say either of them is better?

              1. Dear Basavaraj, I appreciate your patience.

                I will definitely stick to one company. I am only looking for the one opinion which company is better? LIC or ICICI in term plan that no one deliberately rejects the claim even after declaring all thing truthfully in form. (Saare facts form mai truthfully declare krne k baad, dono mai se konsi company better hai, k jaan bujh k koi claim reject na kre. Mai consi company pe bharosa krun ICICI ya LIC? ya dono same hai is condition mai?)

  13. Hi

    I wanted to buy Term Insurance. I am confused between LIC – Tech term plan vs ICICI pru iProtect smart. Reason to buy from ICICI is premium waiver in case of disability and critical illness cover but they has lot of term and condition/Exemptions/Force Disclosure to even to get claim at required time in future, however in LIC there is no exemption except suicide but no waiver option and critical illness benefit.

    My main focus is to get full claim amount if scenario came across in future.

    Which is the better LIC Term Plan or ICICI iProtect smart term plan?

  14. Hi, I’m looking to go for Term insurance plan. Im 33yrs old, I earn 75k/month.. what needs to be looked in before taking Term insurance and rider benefits to opt for.
    please suggest which insurer is best to go with.

  15. Hello Sir,
    I have 2 term policies.
    1) LIC Amulya Jeevan – 25 Lakhs – From 2014 – Around 6,400/year
    2) Aegon iTerm Plus – 1 Crore – From 2018 – Around 10,000/year
    Is it wise to stop the LIC term policy & take 50 Lakhs term policy with same premium from other insurers.
    If so any problems in future??
    I am married & have 2 kids.
    Thanks you

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