IRDA Claim Settlement Ratio 2014-15: Know Best Life Insurance Company
Death claim settlement ratio of 2014-15 is out. The IRDA has released its annual report. The annual report of IRDA takes an account of the current situation of insurance industry. In the report, The IRDA publishes the claim settlement table as well. This table helps us to choose the best life insurance company.Information In Death Claim settlement Table
Number of death claims
The IRDA lists the total death claim reported to every company. This data does not tell anything in isolation except the popularity of the company. A company with the greater number of policyholder would face greater death claims.Number of Death Claims Settled
It is a valuable data. This data tells you about the number of claims which were accepted by the insurance company. The insurance company must have honoured these death claims. These numbers give you an assurance about the life insurance company.Claim Settlement Ratio (Numbers)
By comparing the total number of claims settled with the total claims made, we get the claim settlement ratio.If out of 100 claims. the 80 is paid, the claim settlement ratio would be 80%. To get the claim settlement ratio of a company you have to go through these steps.
- Multiply the total claims with 100
- Divide the product by the claims settled
Number of Death Claims Rejected
This data tell you about the claim rejection statistics of the company. There may be several reasons of the claim rejection. It is natural that with the increase of policyholder, instancse of claim rejection also increases. Therefore, mere this data does not give your right information about the company.Amount of Death Claims Settled
This data is important for the further analysis of the death claims. Through this data, you get to know the average ticket size of the death claims.Amount of Death Claims Rejected
This data is used to get the average ticket size of rejected claims. Through this data, you can take a better decision on the basis of your sum assured.Pending Death Claims and Duration
Through the IRDA death claims table, you also get to know about the total number of pending death claims. IRDA divides the death claims on the basis of pending duration.This data tells you about the unprofessional attitude of the company.
What is Important to You
The claim settlement ratio and other data are used to choose the best life insurance company. However, the data given by the IRDA does not give you the complete picture. It needs proper analysis so that you can choose the best life insurance company.This data would be able to give you the answer of following questions.
What would be the probability of death claim settlement of an insurance company?
No one can predict the future. We don’t know the practices of an insurance company in the future. Therefore, we rely on the historical data to assess the attitude of a company. Assuming that current rate of death settlement ratio would continue, we choose the best life insurance company.The IRDA table tells us about the death settlement ratio of the previous year. You can also see the death settlement ratio of earlier years as well. It published every year in the annual report of the IRDA.
Death Claim Settlement Ratio Graph
Death Claim Settlement Ratio Table
Does company Delay the Settlement
The delay in claim settlement can be a big harassment. The IRDA also gives detail about the period of claim settlement. By going through the IRDA Death claim settlement table, you can know about life insurance companies which have delayed most in the claim settlement. You would also know the delay period.Pending Claim Duration
Does company Rejects the Big Ticket Claims
It is a crucial data which is often overlooked. Since Term insurance plan is getting popularity, people are liberally opting for the high life cover.Indeed, everyone should have the enough life cover for the well-being of his/her family. But, do the insurance company has the different attitude for the high claim. Theoretically, it should not be the case. But in practice, it happens. From this table, you can know the average amount of settled claim and the average amount of rejected claims.
The IRDA table is too big to comprehend, therefore I have divided this table into more than one parts.
Average Amount of Claim Settled And Rejected
Inference of Life Insurance Claims Settlement Data
After going through the IRDA claims settlement data of life insurance companies I have reached to the following important points.Companies Mostly Reject Big Claims
The claim settlement ratio on the basis of number does not show the complete picture. You can expect 90% probability of claim settlement from top companies. But it is not true if the claim amount is big. Look at the last table above. There is a big difference between the average amount of claim settled and the average amount of claim rejected.The average amount of rejected claims is much higher. Why is this Anomaly? Because companies become more cautious when the claim amount is big.
This caution of companies may be genuine but it can be harassing for the families of the policyholder. Indeed this extra caution makes the policies with high sum assured more vulnerable of the rejection.
We don’t get the claim settlement ratio for the above average claim amount or different amount band. Otherwise we would have got the right picture.
However, we can reach to the conclusion that as much as the sum assured increases the chance of rejection rises.
This phenomenon is not limited to few companies. Every company becomes more cautious if the claim amount is big.
Some Private companies have Improved a lot
There are few private companies which are trying hard to challenge the biggies.Last Year Max Life entered the top 5 best life insurance company. It has improved its ranking further. Now Max Life is the second best company which has settled most of the claims. The settlement of Max Life was also very good in amount terms as well. Considering the average amount of claim settlement (2.79 Lakh), Max Life has proved itself the best-managed company. The average claim settlement amount of Max Life is double of the LIC. Therefore, claim settlement ratio of Max Life should carry more weightage than the ratio of LIC.
Star Union has also improved its performance. In the claim settlement data of 2013-2014, the Star union has settled about 93% of the claims, however in amount term it was only 78%. But in the 2014-15, the Star Union has taken a big jump in the amount terms. It has settled 91.5% of the claimed amount.
Tata AIA has also bettered its ranking. Now it is one of the top 10 life insurance companies on the basis of claim settlement. It has improved the claim settlement ratio by 5%.
Birla SunLife has also tried to settle most of the death claims. Its claim settlement ratio has gone 95% from the 88%. It is a big leap. However, It was not much liberal when the claimed amount was big. The claim settlement ration on the basis of the amount is still at 87%.
HDFC Life is slipping Rapidly
One of the most popular life insurance company, The HDFC Life is slipping very rapidly. Its claim settlement ratio on the basis of number has come down to 91% from the 94%. But real worry lies in the claim settlement on the basis of amount. It came down to 65.5% from the 85.5%. It is a heavy drop. Did HDFC Life often tried to reject big claim amount? It is a worrisome sign.The existing HDFC Life policyholder with big sum assured should become conscious. They need to monitor the HDFC Life claim settlement ratio.
LIC Settled Most Claims But Ticket Size is Very Low
LIC is consistently on the top. It has been ver tough for private companies to reach near LIC. This year it has improved its claim settlement ratio. It has settled 98.19% claims against 98.14% last year. On the amount terms as well it has settled 95.51% claims. Again, it is better than last year.However, LIC has an advantage over private insurers. The average claim size of LIC is very low. It is only 1.25 lakh. It is one of the lowest ticket sizes. The LIC sells endowment plan most. These plans have small life cover.
Because of the low amount, settlement of claims become very easy. There is rare chance of fraud for such a small amount, thus LIC manages to show the good numbers.
On the other hand, the nearest competitor of LIC the Max Life had the average claim amount at 2.87 lakh.
Analysis of Some Most Popular Companies
In the course of claim settlement table analysis of 2014-15, I have talked about some companies. But there are other companies which are very popular and people want to know about them as well.Claim Settlement Ratio of ICICI Pru Life
In the Year 2013-14, the ICICI Pru Life was the second best insurer on the basis of claim settlement. It has settled 94% claims. The company has almost maintained this ratio. But, now it stands on the 5th number. Three companies have superseded the ICICI Pru Life.However, the claim settlement in amount term is also not very good. It was mere 78% . In this count, the ICICI Pru Life is far behind. The company has been very conservative if the claim is big. The average claim amount of the ICICI Pru Life is 3.60 lakh while the average rejected claim amount is 11.47 lakh. This shows its reluctance for payment of higher claims
Claim Settlement Ratio of SBI Life
SBI Life has slipped out of the top 10 companies this time. The claim settlement ratio on the basis of the number was 89%. While on the basis of amount, it is 83%. However, there is no big difference between the average amount of claim settled and claim rejected. We have to see how the SBI Life fares in coming years.Claim Settlement Ratio of Bajaj Allianz
Bajaj Allianz has maintained its position. It has been among the top ten companies and still it is among the top companies. The claim settlement ratio on the basis of number is static at 91%. On the basis of the amount, it has been about 81%.It is my analysis of claim settlement ratio of life insurance companies of 2014-15. You can also read the annual report of the IRDA. It has the comprehensive account of the insurance industry.