Normally, insurance companies settle a variety of claims each year. These claims may be survival claim, maturity claim, surrender claim and death claim. One figure that would fancy anyone who has bought a life insurance policy is the death claim ratio. It is even more important in case of term plan as other types of claim are irrelevant.
In case of investment, backed insurance plans if there are disputes regarding claim, at least the insurer pays the cash value to family. In case the claim is repudiated, the legal battles may last a few years.
The service level turnaround time (TAT) as specified by IRDA with regard to death claim is listed below. Insurance companies must honour these else, they are liable to be penalised.
|Service||Maximum Turnaround Time|
|Death claim settlement without Investigation requirement||30 days|
|Death claim settlement/repudiation with Investigation requirement||6 months|
Death claim: a key factor for buying term insurance
If, you are buying investment backed Insurance probably you would be tempted by the bonus rates, fund performance or guaranteed payouts. The claim settlement ratio may take a back seat. However, for term plan it would not be prudent to turn a blind eye to claim settlement ratio.
Please note that claim settlement for term insurance may not be exclusively available. The claim settlement ratio will be aggregate of all type of plans. It will definitely give a ballpark number on claim settlement and attitude of company in settling the claims.
What is claim settlement ratio?
In very simple words claim settlement ratio is the number of claims settled for every 100 claims received by the life insurance company. For example if an insurance company has received 100 claims in a year and it has settled 95 claims out of it, then the claim settlement ratio will be 95%. Superior the claim settlement ratio for the company, the better.
For your convenience claims for last 5 years has been extracted here. Rounded off to nearest percentage
Individual Death Claims Data
|Name of Comapany in Albhabetically||2010-11||2009-10||2008-09||2007-08||2006-07||Average|
|Claims settled %||Claims repudiated %||Claims settled %||Claims repudiated %||Claims settled %||Claims repudiated %||Claims settled %||Claims repudiated %||Claims settled %||Claims repudiated %||Claims settled %||Claims repudiated %|
|AEGON Religare Life Insurance Company Limited.||52.31||44.62||48||44||0||71.43||Commenced operations in later years||33.44||53.35|
|Aviva Life Insurance Company India Limited||84.15||12.23||87.11||9.75||71.77||19.33||69.06||12.78||72.44||9.19||76.91||12.66|
|Bajaj Allianz Life Insurance Company Limited||88.69||7.08||88.18||5.2||87.29||8.35||77.58||10.55||72||18.03||82.75||9.84|
|Bharti AXA Life Insurance Company Ltd.||87.17||12.58||77.8||22.2||53.2||44.83||34.62||38.46||Commenced operations in later years||63.198||29.52|
|Birla Sun Life Insurance Co. Ltd||94.66||4.99||89.09||10.62||89.12||10.37||91.37||7.47||79.03||19.24||88.65||10.54|
|Canara HSBC Oriental Bank of Commerce Life Insurance Company Ltd.||71.02||16.61||38.71||16.13||31.25||18.75||Commenced operations in later years||47.00||17.16|
|DLF Pramerica Life Insurance Co. Ltd.||51.22||19.51||40||10||Commenced operations in later years||45.61||14.76|
|Future Generali India Life Insurance Company Limited||50.52||21.53||38.85||29.36||56.57||30||Commenced operations in later years||48.65||26.96|
|HDFC Standard Life Insurance Co. Ltd||95.41||3.97||91.14||4.67||87.96||4.8||80.75||4.22||66.54||18.07||84.36||7.15|
|ICICI Prudential Life Insurance Co. Ltd||94.51||3.14||90.17||3.27||86.55||5.2||87.92||6.57||89.52||6.12||89.73||4.86|
|IDBI Federal Life Insurance||64.92||21||49.52||23.81||30.77||5.13||Commenced operations in later years||48.40||16.65|
|IndiaFirst Life Insurance Company Limited||82.01||17.99||53.85||7.69||Commenced operations in later years||67.93||12.84|
|Exide Life Insurance Company Ltd.||90.49||3.53||89.3||4.26||77.48||7.81||55.84||14.04||56.06||13.88||73.83||8.70|
|Kotak Mahindra Old Mutual Life Insurance Limited||89.3||3.89||86.97||4.39||77.08||9.23||58.89||25.32||52.95||14.09||73.038||11.38|
|Life Insurance Corporation of India||97.03||1||96.54||1.21||95.48||1.33||96.71||1.13||96.94||1.43||96.54||1.22|
|Max New York Life Insurance Co. Ltd||77.96||14.9||65.51||12.31||90.02||7.77||90.37||9.42||68.09||13.51||78.39||11.58|
|Met Life India Insurance Company Ltd.||85.43||6.06||82.54||5.94||57.89||22.77||47.41||21.41||46.61||21.72||63.98||15.58|
|Reliance Life Insurance Company Limited.||81.35||8.66||89.07||7.05||86.57||5.67||91.13||8.47||86.47||8.91||86.92||7.75|
|Sahara India Life Insurance Co, Ltd.||55.69||25.87||63.06||6.84||45.1||12.3||44.09||4.84||43.18||9.09||50.22||11.79|
|SBI Life Insurance Co. Ltd||82.24||16.73||83.27||14.75||76.57||15.09||81.48||7.1||71.95||13.44||79.10||13.42|
|Shriram Life Insurance Co, Ltd.||55.69||25.87||39.94||19.73||39.44||24.27||39.14||19.19||14.81||1.23||37.80||18.06|
|Star Union Dai-ichi Life||80.69||1.38||58.33||5||Commenced operations in later years||69.51||3.19|
|Tata AIG Life Insurance Company Limited||81.93||17.07||78.17||12.93||61.19||27.78||55.83||24.82||61.22||23.69||73.76||21.26|
|This data is for individual death claims and is based on number of polices.|
|Data takes into account all type of policies and does not represent any particular type of polices such as term plan, endowment or unit linked policy|
|This data has been extracted from the Annual report of IRDA , publicly available on IRDA website.|
|For complete analysis you can include pending claims data, as well as ageing of pending claims.|
Cartoons courtesy "Insurance Foundation of India" a NGO working on Insurance Literacy
What is the conclusion?
There are number of customers who believe in buying from insurers who have better claim settlement statistics rather than lower premium. They are ready to pay a higher price for it as well. Death claim settlement ratio is a key factor that helps people in selecting the right insurance company for buying an term cover. However, you should also take into account that most of the claim for new insurers would fall in the 0-5 year period. Most of the early death claims are suspected for fraud and suppression of material facts, hence investigated thoroughly.
If you want further assistance on selecting an appropriate insurance company product, you can call us or leave your contact details for further discussion.