One should check the Claim Settlement Ratio before buying any life insurance policy. A Claim Settlement Ratio of life insurance company can be found in IRDA (Insurance Regulatory Development Authority) annual report. The annual report of IRDA for the year 2016-17 is released recently. LIC is once again topping the chart in terms of claim settlement ratio for the year 2016-17. Let’s try to look at claim settlement ratio and other important data given in the Annual report of IRDA.
What is Claim Settlement Ratio?
A Claim settlement ratio means a number of claims settled or paid on the claim/death of policyholder by the insurance company. If 1000 claims are made in the year and 980 claims are settled claim settlement ratio of the company would be 98%.
The abbreviation of Claim Settlement Ratio is CSR. It is one of the important factors in rating insurance companies. High CSR means trustworthy and reliable insurance company. On the other hand low ratio indicates that the insurance company is less reliable in the CSR.
Best Insurance company in Claim Settlement – LIC
LIC (Life Insurance Corporation of India) is again rated as the best life insurance company of India in terms of claim settlement ratio. The claim settlement ratio of LIC last year (2016-17) was 98.31%. The performance of LIC in CSR is excellent. The company in the core life insurance business since several years.
CSR of LIC is best, however, policies and kind or return offered by LIC is average and not up to the mark. Apart from LIC other insurance companies leading the chart of Claim Settlement Ratio are Max Life, HDFC Standard, Aegon Religare, SBI Life, ICICI Prudential Life, Exide life and Tata AIG.
IRDA Claim Settlement Ratio 2016-17
Above chart is divided into three parts. Eight out of 23 Insurance companies are in the range of CSR 95% and above. Ten Insurance companies are in the range of CSR above 90% but less than 95%. Five Insurance companies are with claim insurance ratio below 90%. Shriram Life is worst with a ratio of 63.53%.
- A number of claims received and paid by LIC are highest compared to all other insurance company. This makes LIC is most popular and trustworthy insurance company of India.
- From above CSR detail, we cannot say anything about product type and return given by product.
- This claim settlement ratio does not give insight about claim paid for types of insurance policies like term plan, endowment plan etc.
- You cannot rely entirely on Claim Settlement Ratio for the section of the Insurance company or Insurance product.
- Section 45 of Insurance act says that No policy of life insurance shall be called into question on any ground whatsoever after the expiry of three years from the date of the policy. So, this act will guide you.
Best Insurance Companies
If we consider claim settlement ratio as the only factor. Following Insurance companies are best.
- LIC Of India
- Max Life
- HDFC Standard
- Aegon Religare
- SBI Life
- ICICI Prudential Life
- Exide life
- Tata AIG.
Point to remember before purchasing Insurance Policy –
- Insurance policy is product for life protection and not for investment. So, my advice is to buy a term plan for high-risk coverage instead of other plans.
- Use claim settlement ratio as one of the factors while buying an insurance policy. CSR should not be the only factor for deciding Life Insurance Company.
- Compare at least last three years CSR to get a fair idea about the insurance company.
- Apart from CSR, you should also look at average claim settlement time. It should be less than or equal to 30 days.
- Compare all other features of the insurance policy before buying.
- Never allow any insurance agent or representative to fill the application form for insurance.
- Disclose all reverent information asked in the form.
Hope details of IRDA claim settlement ratio will be useful to you. Do share your queries in the comment section.
For more information refer to IRDA Annual Report 2016-17.
Article by Raviraj
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