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Claim Settlement Ratio of Life Insurance Companies (Last 5 Years)

Claim Settlement Ratio of Life Insurance Companies (Last 5 Years)

One of the key parameters while considering a life insurance plan is claim settlement ratio (CSR). The IRDA annual report contains the claim settlement ratios of LIC and other private life insurance companies. IRDA publishes these reports during Dec-February pertaining to the previous financial year. Any individual who is planning to take a life insurance plan can consider the claims ratio as one of the criteria in choosing a life insurance plan. In this article we would provide last 5 years Claim Settlement Ratios of Life Insurance companies.

What is Claim Settlement Ratio?


Claim Settlement Ratio or CSR is the ratio of a life insurance company indicating on the claims settled over the total claims received by the company during the financial year (April to March).

Let us explain with an example.

X Life insurance company Limited has received 1,000 claims during a financial year. They have settled 950 claims and balance claims are repudiated / rejected by the insurance company.

Claim Settlement Ratio (CSR) Formula = Claims Settled / Total Claims Paid

CSR = 950/1,000 = 95%.

Why it is important to check the Claim Settlement Ratio?


If you are planning to take a life insurance plan, it is important for you to check CSR for the following reasons:

1) High Claim Settlement Ratio means the company is setting higher claims and rejecting lower claims. In case of unfortunate death of the policy holder, there is less chance that the life insurance claim is rejected and family members can be secured.

2) The life insurance company has strong underwriting procedures.

3) Creates customer confidence that in their absence, future claim might be honored without hassles.

Consistent high claim settlement ratio would indicate that the life insurance company has robust processes in claim settlement as well as underwriting process.

Latest Claim Settlement Ratio of Life Insurance Company 2021


IRDA annual report is published every year during Dec to Feb pertaining to previous financial year. The claim settlement ratio is part of this annual report. Latest Claim Settlement Ratio is published for 2021. Here are the highlights of the Claim Ratio of 2021 (Financial Year 2019-2020).

1) Max Life Insurance has a highest claim settlement ratio of 99.22%

2) HDFC Life Insurance has a second largest claim ratio of 99.07%

3) Tata AIA Life Insurance has a third largest claim ratio of 99.06%

4) Top 10 life insurance companies have over 98% settlement ratio.

5) Largest life insurance company, LIC has 96.69% claim ratio.

Here is the list of top 10 life insurance companies with total claims, claims paid, claims repudiated (rejected) and claim settlement ratio.

Life Insurance Claims Ratio 2021 – Individual death claims


Insurer Total Claims Received Claims Paid CSR (Claims Paid / Total Claims) Claims
Repudiated
Repudiated
%
Max Life 15,463 15,342 99.22% 120 0.78%
HDFC 12,626 12,509 99.07% 54 0.43%
Tata AIA 2,982 2,954 99.06% 28 0.94%
Pramerica Life 569 560 98.42% 7 1.23%
Exide Life 3,468 3,404 98.15% 26 0.75%
Canara HSBC OBC 1,276 1,252 98.12% 22 1.72%
Reliance Nippon 8,017 7,866 98.12% 149 1.86%
Bajaj Allianz 12,127 11,887 98.02% 237 1.95%
Aegon 351 344 98.01% 7 1.99%
ICICI Prudential 11,460 11,212 97.84% 153 1.34%

 Claim Settlement Ratio of Life Insurance Companies in the last 5 years


Insurance 2020-21 2019-20 2018-19 2017-18 2016-17
Max Life 99.35% 99.22% 98.74% 98.26% 97.81%
Aegon Life 99.25% 98.01% 96.45% 95.67% 97.11%
Bajaj Allianz Life 98.50% 98.02% 95.01% 92.04% 91.67%
Kotak Life 98.50% 96.38% 97.40% 93.72% 91.24%
Reliance Life 98.48% 98.12% 97.71% 95.17% 94.53%
DHFL Pramerica Life 98.42% 98.42% 96.80% 96.62% 90.87%
Canara-HSBC Life 98.12% 98.12% 94.04% 95.22% 94.95%
Aditya Birla Sun Life 98.04% 97.54% 97.15% 96.38% 94.69%
Tata AIA Life 98.02% 99.06% 99.07% 98.00% 96.01%
HDFC Life 98.01% 99.07% 97.15% 97.80% 97.62%
Aviva Life 98.00% 97.53% 96.06% 94.45% 90.60%
ICICI Pru Life 97.90% 97.84% 98.58% 97.88% 96.68%
Bharti Axa Life 97.35% 97.35% 97.28% 96.85% 92.37%
PNB Metlife India Life 97.18% 97.18% 96.21% 91.12% 87.14%
Edelweiss Tokio Life 97.00% 83.44% 95.82% 95.24% 93.29%
StarUnion Dai-Ichi Life 96.96% 96.96% 96.74% 92.26% 84.05%
IndiaFirst Life 96.81% 96.65% 92.82% 89.83% 82.65%
LIC of India 96.70% 96.70% 97.79% 98.04% 98.31%
Ageas Federal Life 96.47% 96.47% 95.79% 91.99% 90.33%
Future Generali Life 94.86% 95.28% 95.16% 93.11% 89.53%
SBI Life 94.52% 94.52% 95.03% 96.76% 96.69%
Shriram Life 91.61% 91.61% 85.30% 80.23% 63.53%
Sahara India Life 89.45% 89.45% 90.16% 82.74% 90.21%

*Source: IRDA Annual Report 2021

Points to consider in Claim Settlement Ratio


While CSR is one of the key parameters in choosing a life insurance policy, there are few things to consider:

1) Size matters :  Life insurance company which is small in size can manage things well and have good underwriting procedures. In such case claim settlement could be higher. Think of large life insurance companies where there are a high number of policies. In such case claims ratio can give incorrect picture.

2) LIC Vs. Private insurance companies:  LIC still holds majority of the share for life insurance in India. For 2019-2020, LIC has settled 7.58 Lakhs claims vs. all private insurance put together claimed 1.16 Lakhs. The reason is LIC is trusted brand by many individuals.

Suresh KP

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