IRDA Life Insurance Claim Settlement Ratio 2022
IRDA has released its annual report for 2020-21 a few days back, which contains life Insurance Claim Settlement Ratios for the year 2020-21. Generally they would publish this report after 9-10 months from the date of closure of the financial year. IRDA analyse several key details and publishes these details as part of their annual report. In this article we would provide highlights of the IRDA annual report and also provide Latest IRDA Life Insurance claim settlement ratio for 2022.
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What is Claim Settlement Ratio (CSR)?
If you are already familiar about this, you can skip this section.
The Claim Settlement Ratio (CSR) is the ratio arrived by comparing the total death claims paid over the total death claims received by the life insurance company.
As an example, if an insurance company has received 1000 claims during a year, but paid only 950 claims and repudiated/rejected 50 claims, claim settlement ratio is 95%.
Higher claim settlement ratio means, higher the acceptance by the life insurance company for the life insurance claims during that year. Hence, individuals would prefer high claim settlement ratio insurance companies so that their claim is not rejected in the future.
This is one of the key parameters in choosing a good life insurance policy.
Highlights of IRDA Claim Settlement Ratio 2022
Here are the key highlights of the IRDA annual report about claim settlement ratios for 2020-21 pertaining to individual death claims.
1) The claim Settlement ratio of LIC has increased this year compared to Private Life Insurance Companies. The LIC Claim Settlement Ratio has increased from 96.69% (2019-20) to 98.62% (2020-21). Repudiation (Rejections) has marginally decreased from 1.09% (2019-20) to 1% (2020-21).
2) Private Insurers Claim Settlement Ratio has marginally reduced from 97.18% (2019-20) to 97.02% (2020-21). Repudiation has reduced from 2.5% (2019-20) to 2% (2020-21).
3) Overall industry claims settlement ratio increased from 96.76% (2019-20) to 98.39% (2020-21). Overall industry repudiation reduced from 1.28% (2019-20) to 1.14% (2020-21). This means life insurance companies are approving more claims compared to previous years.
4) LIC Market shared marginally decreased from 66.22% to 64.14% in terms of total premiums collected. Private Insurance company’s premiums are at 35.76% out of total premiums collected.
Best Life Insurance Company based on the Claim Settment Ratio
Here is the list of Top 15 Best Life Insurance Companies based on Claim Settlement Ratio (CSR) in 2022. Last year, LIC was figuring in 16th position, whereas this year it is figuring in 4th position.
Can my life insurance company reject claims in future?
Yes. They can cite any reason and reject claims in future.
However, as per the earlier amendment to Section 45 of the Insurance Act, if your policy has completed 3 years, irrespective of what happens, the life insurance company should not deny the life insurance claims. Hence the life insurance company has only 3 years in hand to reject the policy based on any misrepresentation or misstatement. Once 3 policy tenure is completed, then the life insurance company has to settle the claims and has no right to reject them.
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Should you opt for high claim settlement ratio insurance companies?
If you are picking a term insurance plan, there are several things to be considered. One of the key parameters is claim settlement ratio. One should note that we cannot do anything if claim settlement ratios are coming down compared to previous years. However, a few companies like HDFC Life, Max Life, Aegon, ICICI Life Insurance and LIC claim settlement ratios are consistently above 95%.
This does not mean you can stick to such companies even if they charge higher premiums. One can select insurance companies that consistently have > 95% claim settlement ratio. This way you are not sticking to just the top 5 (which might change every year).
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When all insurance companies are governed by IRDA is there any of company running away or can withdraw itself if yes then who will protect customer rights
Customer rights are protected by IRDA. Till now there are no such instances happened in Indian history where insurance company has run away. However, we cannot rule out in future if there are any major disasters and companies would lift their hands and not pay claims. If we are taking 2 plans or more, diversifying across insurance companies could be a good idea
Thanks for the information
How many SA Amout will be paid by company and How much SA claim registration done and how SA Amount claim Reputation any that figure will make some good ideas for choosing
You can go through the IRDA annual report for such details