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Claim Settlement Ratio Of Life Insurance Companies

There are many insurance companies in the market competing with each other to be the best insurance provider. With a large variety of insurance providers and life insurance plans offered by them a potential buyer can get confused easily. It is necessary to look out for a plan that best suits you keeping in mind that the insurance company you choose is trustworthy and reliable. Claim settlement ratio represents trustworthiness and reliability of an insurance company.

What is the Claim Settlement Ratio?

Claim settlement ratio represents the number of claims settled against the total number of claims in a financial year. This ratio is presented in a percentage form. An insurance company’s claim settlement ratio is kept under observation by the Insurance Regulatory and Development Authority(IRDA). This ratio helps in finding out the activeness of an insurance company in terms of claim settlement. High claim settlement ratio of the insurance company depicts the dedication of the insurance company in terms of claim settlement. This represents the loyalty of the insurance company towards its customers.

How is the claim settlement ratio calculated?

Following is the formula of calculating the claim settlement ratio:

Claim settlement ratio = (Total number of claims settled/Total number of claims received) x 100

The claim settlement ratio is presented in percentage form. Assuming the claim settlement ratio of an insurance company is 86%, means that out of 100 claims received 86 claims are approved for being settled and paid out. 

Claim Settlement Ratio of Life Insurance Companies in India

Following is the list of claim settlement ratio of the best life insurance companies in India: 

Life Insurance Company

Claim Settlement Ratio 2019-20

No. of Claims Paid 2019-20

Max Life Insurance

99.22%

15342

HDFC Life Insurance 

99.07%

12509

Tata AIA Life Insurance

99.06%

2954

Dhfl Pramerica Life Insurance

98.42%

560

Exide Life Insurance

98.15%

3404

Reliance Life Insurance

98.14%

7866

Canara Hsbc Life Insurance 

98.12%

1252

Bajaj Allianz Life Insurance

98.02%

11887

Aegon Life Insurance

98.01%

344

ICICI Prudential Life Insurance 

97.84%

11212

Aditya Birla Sun Life Insurance

97.54%

5035

Aviva India Life Insurance

97.53%

790

Bharti Axa Life Insurance

97.35%

1285

PNB MetLife Insurance

97.18%

4241

Daiichi Life Insurance

96.96%

1210

Life Insurance Corporation India (LIC)

96.69%

733809

Indiafirst Life Insurance 

96.65%

2166

IDBI Federal Life Insurance

96.47%

1366

Kotak Life Insurance 

96.38%

3225

Future Generali Life Insurance

95.28%

1089

SBI Life Insurance

94.52%

21257

Shriram Life Insurance 

91.61%

2816

Sahara India Life Insurance

89.54%

585

Edelweiss Tokio Life Insurance

83.44%

272

(Source: IRDAI Annual Report - Claim Settlement Ratio for the year 2019-20)

Why is claim settlement noteworthy?

Claim settlement represents the total number of claims settled by the insurance company in a financial year. Claim settlement ratio is one of the factors that depicts the insurance company’s effectiveness and customer handling potential. It is one of the factors one must consider when purchasing a life insurance plan. 

Life insurance is bought so that the family of the policyholder is not dependent on anyone in case of the policyholder's absence and the family members can claim the money invested in the insurance policy. High claim settlement ratio of an insurance company represents that the company has a smooth and effective claim settlement procedure. Claim settlement ratio of the company also indicates that the insurance company satisfies its customers appropriately. 

Take Away

It is important to consider the claim settlement ratio of an insurance company before purchasing the life insurance plan because there is no use of opting for an insurance company that does not satisfy its customers and does not work effectively to provide hassle-free claims. 

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