Insurance Claim Settlement Ratios for 2012-13


Insurance Claim settlement ratio 2012-13Insurance Claim Settlement Ratios for 2012-13-LIC up and Private insurers down

Few days back, IRDA, insurance regulator has published Insurance claim settlement ratio for 2012-13 year. There were some shocking things observed, especially about the data of private insurance companies. If you have taken term insurance plans or life insurance policies from private insurers, you should read this article. In this article, I would provide about Insurance claim settlement ratio for 2012-13, LIC vs top private insurance companies and how such info can change our decision to buy a life insurance plan.

Also Read: Best Term Insurance Plans in India

What is an Insurance Claim Settlement ratio?

Insurance claim settlement ratio are a number of policies an insurance company settled/approved over the total number of insurance claims received. E.g. if LIC has received 1,000 insurance claims in a year and it has approved/settled 950 claims and rejected 50 claims, 950 / 1000 = 95% are claiming settlement ratio. The higher the settlement ratio, the lower are rejections, hence it would be safe for an individual who is planning to take an insurance plan. It is immaterial whether insurance plan is for protection or protection cum savings plan.

What are Insurance Claim Settlement ratios for 2012-13?

  • LIC                    – 97.73%
  • Private Insurers  – 88.65%

Details of some of the top private insurance companies

  • ICICI Pru life       – 96.29%
  • HDFC Life          – 95.76%
  • SBI Life              – 94.41%
  • Max Life            – 94.25%
  • Kotak Life          – 92.04%

For any other private insurance company, you can directly visit the insurance company website and search for claim settlement ratio.

Who is doing better and who is worst?


  • LIC topped the claim settlement ratio, which has improved from 97.42% from the previous year to 97.73% for 2012-13 year.
  • However, private insurers claim settlement ratio has reduced from 89.34% of  the previous year to 88.65% by 2012-13.
  • Some of the top private insurance players have good claim settlement ratio and they are ICICI Pru Life, HDFC Life, and SBI Life etc.
  • However, smaller private insurance companies like AEGON Religare, Edelweiss Tokio Life, DLF Pramarica Life, Shriram Life etc. are among the lowest claim settlement ratio in 2012-13. Considering life insurance plans are high risk from such low claim settlement ratio insurers.

What do such companies say about low claim settlement ratio of 2012-13

Everyone has their own story. Out of 23 private insurance companies, only 5 insurance companies claim settlement ratio is above 90%. All others are below this rate, which is a major concern. Private insurance companies are showing some of the reasons given below for such low settlement ratio.

  • Wrong information provided in an insurance proposal form
  • Non disclosure of important facts
  • Agents fill on behalf of insured thereby providing incomplete or wrong info.

What should you do now if you have purchased life insurance from such low settlement ratio insurance companies?

While I would not advise you to surrender the existing life insurance policies, you can consider some of the below tips:

  • Read all the terms & conditions, disclosures carefully in your term insurance plan document received from your insurance company. In case of any material impact, reach out to the insurance company to modify and incorporate it appropriately. E.g. I have Asthma. I have ensured that such fact is disclosed and it appears in my final policy document received from the insurance company. Anything relating to your health, diseases, smoking, alcohol consumption, etc., should be disclosed and it should appear in your policy document.
  • Revisit your insurance requirement and consider buying additional term insurance from companies like ICICI Pru Life (I-Care term insurance plan), HDFC Life (Click-2-protect the term insurance plan), Birla Sun Life (Term insurance plan) etc.  I had LIC Term insurance plan. I wanted to buy additional term insurance and approached ICICI and HDFC Life. I had a little bad experience about reaching customer support at HDFC Life for more than 60 days, but I am not sure whether everyone is facing this problem. Recently, I purchased ICICI I-Care term insurance plan as an additional cover.

Also read: HDFC Guaranteed Pension Plan

Conclusion: Don’t just ignore such an important fact about the claim settlement ratio of your insurance company. You certainly need to take care of this as you have purchased such policy to protect your family in your absence. Taking small such care can help your family to have a peaceful life, even if you are not there.

Readers, have you experienced such situation where you purchased insurance plan and realised low claim settlement ratio? What have you done to over come this problem ?

If you enjoyed this article, share it with your friends and colleagues on  Facebook and Twitter.

Suresh
Insurance Claim Settlement Ratios for 2012-13


Article by Suresh

Suresh KP i.e. me have written 400+ articles on this blog. I love doing analysis and identifying the Best investment options.

26 Comments

  1. vijaylaxmi gupta says:

    Hello sir

    Please tell me wht is the edelweiss tokio life insurance cliam ratio????

    Regards

    • Suresh KP says:

      Hi Vijaylaxmi, edelweiss tokio life insurance cliam ratio is 15.73% (2012-13). You should avoid such insurance companies from taking insurance policies

  2. Pradeep Agrawal says:

    Sir,

    I am 35 and currently planning to but 2 Term Plans of 1 Cr each please suggest which will be the best option to go with and is it good to go for the riders that are given as option along with the policy.

     

  3. ARUN MARATHE says:

    Hello Sir,
    I am really confused between which company to choose for term plan. My age is 52 right now and I'm having a home loan of Rs18Lacs, So I'm looking for the company which gives better claim to my family after my death and if I dont die in the term period they I should atleast give me some returns. I can pay upto 25K per annum as premium.
    So which one to opt for? 
    1.LIC
    2.ICICI prudential
    3.Met Life
    4.HDFC
    5.SBI life
    Please help me.
    Thanks & Regards
    ARUN MARATHE

    • Suresh KP says:

      Arun, For term plans, there is only death benefit and no maturity benefit. Hence the premiums are very low. If you want premium return plans or money back plans, they would cost you heavily. Insurance companies would provide investment plans which covers protection too. However, the returns are just 4% to 5.5% per annum. My suggestion is consider term insurance plan and invest balance amount in any recurring deposit or medium term mutual funds like balanced funds or equity funds for 8 to 10 years and you can expect good returns.

  4. pritam says:

    Hi,
    I’m looking to buy Max life’s term plan as it’s CSR 94% and term duration of 35 years(as I’m 23 now). You didn’t mention Max life in top CSR companies. Should I buy this plan?

  5. Neeraj says:

    Sir,

    I have purchased term plan from HDFC, but i have paid my first premium for the third party account. which is not right, thic come to my knowledge later. Now HDFC after many email and requests is telling that my premium can only be returned by visiting branch office which is approx 100 Km from my city. This issue got unhappy me.

    Now at present there are two options available for me whether go for HDFC again (by fresh application) or go for SBI life. please suggest me.

    Thanks 

     

     

    • Suresh KP says:

      Neeraj, Sorry to her your story. HDFC Pru life is good insurance company which has high claim settlment ratio. I would still prefer you to consider HDFC comparing to SBI unless you feel you do not want to proceed. I had similar experience where I approached them several times to take term insurance. Due to some technical issues they were not able to contact me and I had to switch of to ICICI Pru life insurance to take term insurance. 

  6. Dr Jain says:

    Hi Suresh, why is LIC's premium sohigh compared to private players? Is taking insurance from LIC safer than from other companies, e.g., ICIC Pru, which have a high claim settlement ratio?

    • Suresh KP says:

      Hi Dr. Jain, We need to pay for brand. LIC is a good brand and claim settlement ratio is high, hence it would charge high premiums. If you for privte small players, their ratio is small, hence they charge low premiums. Please consider only high settlement ratio plans.

  7. sateesh says:

    hi .

    Recently I came across a new term plan from ICICI-Lifeguard level term plan with return of  premium. Is this better than pru i-care?If the premium is returned, isnt this a better option? Or is there a catch somewhere!

    Thank you

    • Suresh KP says:

      Sateesh, All premium return insurance plans comes with high premiums. If you compare ICICI Pure term plan Vs ICICI Life guard for your age and compute premiums, you would know. However ICICI Life guard comes with riders which pure term insurance does not offer. Hence if you are ok with premiums, you can go ahead with this plan.

  8. yogesh says:

    Dear Sir  I want to buy term insurance . I am non alchoholic and non tobbaco user i compare many insurance company among which Aegon Relligear is cheap premium plan suggest me Shall I buy this policy or not and if i decided to buy what pricausion should i have to take  Thanking you 

     

    • Suresh says:

      Yogesh, As indicated in my article, claim settlement ratio plays important role in buying life insurance. Religare has low claim settlement comparing to others. I prefer to buy the top ones only.

  9. Yogesh says:

    Hi Suresh,

    I have taken Term insurance of 50 lac for premium 4400 YLY from Bharti AXA in Jan 2013. Could you please let me know what is its claim settlement ratio. Shall I continue/or take additional term insurance with some other company. please suggest if Yes then which should I prefer. Thanks for your help. .

    Regards,

    Yogesh

  10. Vikas says:

    Hi Suresh Sir,
    Very informative article. Sir I want to ask you if somebody is feet while purchasing of online term insurance & latter he/she is suffer from any disease for eg dibeteas then he/she need to inform to insurance company?

    • Suresh says:

      Vikas, As per my knowledge this is not required unless policy document states that you should indicate it. Curently there are no such clauses in insurance policy document.

  11. SEETHARAMAN says:

    Nice Article.  Thanks for sharing the information.  One thing I would like to point out for the claim settlement ratio for LIC being very high.  As it is the oldest insurance company, most of the claims received by them will be Maturity claims where there will be 100% acceptance and no rejections is possible.  Hence, we need to take this into account while comparing LIC with private insurers who will have majority of death claims and very few maturity claims.  I have good experience with Kotak Life and I see the premium of private insurers are lower than LIC as well.

    • Suresh says:

      Agreed Seetharaman. However we are seeing a percentage here and not actual numbers. If LIC is getting lakhs of policies every year, and private insurer might be getting few thousands of policies. Percentage / ratio matters here.

  12. Dhawal Sharma says:

    Me being an agent of Kotak life take great pride in our company's performance over the years on this criteria but I would like to add a few things:

    1) As you yourself has indicated in the article above, most of the TOP Insurance companies are having very healthy claim settlement ratio of 92% +. Then why most bloggers advocate AEGON RELIGARE??

    2) Private companies send the policy booklet to its client wherein the copy of proposal form is the part, so that the client can check for any discripency. LIC do not do this, they just send a 4-pager policy. Why dont all of you bloggers highlight this fact??

    3) LIC has over the years, and still has the BEST claim settlement ratio – and it sells virtually ALL of its policies through AGENTS and not online. Does'nt it merit the benefit of buying policies through AGENTS?? please share your view point on this…

    • Suresh says:

      Thanks Dhawal for brining some points to the table. Here are my comments 1) Aegon Religare provides policies at cheaper premiums. May be some of the bloggers recommend from this angle. But tell me which top blogger in India recommended Aegon Religate ?  2) I am 200% agreeing to this. LIC do not send detailed policy checklist. I have taken ICICI term insurance policy and have seen a detailed one where it indicates each and every aspect whether you are agreeing to that or not. 3) Yes, agents mis-sell several policies and LIC is not that exception. My advice is that individual need to do due deligence before buying any policy. If required, let him / her wait for 1 month to do this

      • Kiran kumar says:

        Hi Suresh,

        I have taken term insurence policy from Barathi AXa for 50 Lakhs,but Claim settlement ratio for barathi axa is only 89%. now shall i discontinue this and take term insurance from other insurance companies having good CSR. did i loose anything if i do this.

        please suggest.

        Many thanks,

        Regards,

        kiran

         

         

         

         

        • Suresh says:

          Kiran, I agree that CSR is low. Like I indicated, if you feel you need to take addl insurance plan, go for higher CSR insurance companies. If you take new plan now, you would loose the premium paid this year to Bharti. You would not loose anything beyond this.

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