Latest Life Insurance Claim Settlement Ratio in 2024

In a world where the future is quite uncertain, life insurance serves as a source of financial security for millions of people in India. In essence, it assures you that your loved ones will be shielded from the effects of financial hardship during unexpected events. But how can you be sure the insurance company you've chosen will genuinely assist your family in their time of need? That's where the life insurance claim settlement ratios of insurance companies in India come into the picture. Yes, you read that right! 

Overview of Claim Settlement Ratio

A Claim Settlement Ratio (CSR) refers to the total number of claims successfully resolved by the insurance company versus the number of claim settlement requests received in a year. To put it simply, it is a critical metric that indicates the company's performance in settling insurance claims. This ratio is important as it transparently reflects the claim resolution history of the insurance company. 

Most of the experts in the insurance industry recommend opting for an insurer that bears the highest CSR as it ensures that your nominee is highly likely to receive the policy benefits. 

NOTE: The Insurance Regulatory and Development Authority (IRDAI) publishes the claim settlement ratios of all life insurance companies annually. 

Why Claim Settlement Ratio (CSR) Is important?

Life insurance claim settlement ratio is a crucial aspect but it's also one of the most overlooked facets of the insurance landscape. This ratio tells a story of the reliability and trustworthiness of insurance providers to their policyholders, making it a key component to consider. 

So, it's time to put the magnifying glass on the financial protectors of your family's future and check out the claim settlement ratios of life insurance companies in 2024. But before moving forward, let's get a detailed understanding of what exactly the claim settlement ratio is and what are its related aspects. 

Calculation of Life Insurance Claim Settlement Ratios

The Claim Settlement Ratio or CSR of every life insurance company is calculated by using the formula mentioned below:

CSR = ( Total Claims Successfully Settled in a Year / Total Claims Received in a Year ) X 100

Let’s help you understand this with an example. 

For instance, if ABC company receives 200 claim requests in a year and settles 180 of them successfully then the company’s Claim Settlement Ratio is 90%. 

Top 5 Importance of Claim Settlement Ratio of Life Insurance Companies in India

Mentioned below are the top reasons that make Claim Settlement Ratio of life insurance companies important in India: 

• Trust and Confidence: Policyholders have more faith and confidence when there is a high claim settlement ratio. When people buy life insurance, they are making a long-term financial promise to their loved ones. Knowing that the insurer has a strong track record of settling claims reassures policyholders that their families will be financially covered when a need occurs.
• Financial Security: The primary purpose of life insurance is to provide financial security to the policyholder's nominees in the event of their death. A high claim settlement ratio ensures that this objective is met, giving peace of mind to policyholders.
• Credibility and Reputation: Insurance companies with a high claim settlement ratio tend to have a better reputation in the market. This, in turn, attracts more customers and helps the company grow.
• Educational Tool: Claim settlement ratios are a useful educational resource for consumers. When buying insurance, consumers can make more educated judgments if they understand how this metric works.
• Industry Benchmark: The claim settlement ratio serves as a benchmark for the entire insurance industry. It encourages competition among insurance companies to improve their claim settlement processes and ultimately benefits consumers.

Latest Life Insurance Claim Settlement Ratios of Insurance Companies in 2024

The following table presents the life insurance claim settlement ratios of insurance companies during the financial year 2022-23.

What is a Good Claim Settlement Ratio?

When you're looking at a life insurance company's claim settlement ratio, the number to aim for is typically 90% or higher. Here's why:

Consider a year where the insurance provider received 100 claims. A 90% claim settlement ratio would be achieved if they were able to settle 90 of them. This percentage is encouraging because it indicates that the insurer can pay out most of the claims it receives.

Remember that this ratio can change from one year to another, depending on the number of claims the company successfully settles. Therefore, when you're shopping for a life insurance policy, it's essential to consider this annual percentage along with the company's past performance. 

List of Documents Needed for Life Insurance Claim Settlement Process

The beneficiary will need to submit the below-listed documents to the company during the claim settlement process:

• Correctly filled and signed Claim Application Form
• Original Policy Certificate
• Reports of Post-mortem
• FIR
• Photo Identity Proof of Claimant
• Address Proof of Claimant
• Death Certificate issued by a Local Authority
• Discharge Summary of Hospital
• KYC Documents like Photo ID copy, Address Proof
• Bank Statements and copy of Cancelled Cheque 
• Other Documents asked by the Insurance Company

Reasons Behind Life Insurance Claims Getting Rejected

Some of the most common reasons for life insurance claims getting rejected involve the following:

• Nonpayment of insurance premium amounts on the due date during the grace time.
• Fill in wrong or incorrect information in the life insurance policy application form.
• A false claim made by the nominee or beneficiary of the policy.
• Causes of policyholder’s death not covered under the insurance plan like accidental death caused by overconsumption of alcohol or drugs, suicide before completing 1st policy tenure.

Wrapping Up

The life insurance claim settlement ratios of insurance companies serve as a critical indicator when analysing the reliability of life insurance providers in the country. However, CSR is not the only factor to consider. Instead, it should be weighed alongside other essential factors to ensure a well-informed choice when buying life insurance. This will not only provide you with the assurance of financial security but will also offer complete peace of mind.

Also Read: Is Life Insurance Right for You? Understanding Its Significance