Monday, 14 October 2013

Claim Ratio of Life Insurance Company in India

Claim Settlement Ratio is the ratio of total claims settled by the insurance company verses total claims made during the financial year.
Claim Settlement Ratio = (Total Claims Settled or Paid ÷ Total Number of Claims Made) X 100

Claim can either be maturity claim or death claim.

  1. Maturity Claims are those claims, where the customer has survived the policy term and he is entitled to lump sum amount as per the policy, also called the maturity benefit. 
  2. Maturity Claims are always fully paid by the insurance company, such claims can never be denied on any grounds.
  3. Death Claims are those claims, where the customer dies within the policy term and he is entitled to Sum Assured as per the policy. 
  4. In Death claims, insurance companies generally investigate the case and sometimes reject the claims.


The table given below shows the percentage of total claims settled by the life insurance companies, the following must be considered before making any assumptions

1. There is no differentiation between Death Claim and Maturity Claim in the data.
2. LIC is the oldest life insurance company, almost all the claims may be maturity claims. (upto 99% accuracy)
3. Some of the insurance companies are hardly three to five years old; therefore all of their claims are death claims.
4. Young insurance companies have received early claims which in some cases may be fraudulent in nature.
5. Companies like HDFC, SBI and ICICI have completed 10 years of existence, and therefore their claims ratio has improved.

Conclusion
1. Claim settlement ratio do not provide any clear picture on Term Insurance claim settlement.
2. Difficult to judge private insurance companies selling online term policy


Life insurance companies
Claim settlement ratio (in %)
No of claims settled
Life Insurance Corporation (LIC)
97.42
712501
ICICI Prudential
96.53
14314
HDFC Standard
96.17
4952
SBI Life
95.48
11328
Kotak Mahindra
92.1
2716
Birla Sun Life
90.94
9925
Bajaj Allianz
90.61
24658
Max New York
89.84
8113
Aviva
89.55
2006
ING Vyasa
88.82
2510
Bharti AXA
87.7
820
Star Union Dai-Chi
86.16
411
Reliance Life
84.58
17367
Tata AIG
83.94
4287
IndiaFirst
82.23
449
Met Life
81.37
1769
Canara HSBC
80.58
361
Sahara India
77.97
814
Future General
68.06
1366
IDBI Fortis
67.46
423
AEGON Religare
66.06
181
Shriram
64.93
937
DLF Pramerica
24.46
57
Edelweiss Tokio*
100
1