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 ?

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Suresh
Insurance Claim Settlement Ratios for 2012-13

31 comments

  • ARUN MARATHE

    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

    • 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.

  • pritam

    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?

  • Neeraj

    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 

     

     

    • 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. 

  • Dr Jain

    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?

    • 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.

  • sateesh

    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

    • 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.

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