Synopsis
Claim settlement ratio is one of the crucial metrics that give you a rough sense of how the insurance company honours the policyholders' claims. What is a claim settlement ratio? How is claim settlement ratio calculated? What are the latest claim settlement ratios of the life insurance companies in India? The Insurance Regulatory and Development Authority of India (IRDAI) has recently released the details. All you need to know
Getty ImagesThe main reason why we buy a life insurance policy is to secure the future of our loved ones in case of unfortunate events. So, it is important to check how your insurer settles claims before you invest your hard-earned money in it. Here the concept of claim settlement ratio comes into play. It is one of the crucial metrics that give you a rough sense of how the insurance company honours the policyholders' claims
What is a claim settlement ratio?
Claim settlement ratio is a percentage of claims that the insurer has paid out against the number of outstanding claims during a financial year. As a thumb rule, the higher the claim settlement ratio, the more reliable the insurer is. So if you are planning to buy a new insurance policy or renew your existing one, you must check the claim settlement ratio of the insurer along with other factors such as premium amount and coverage
IRDAI releases latest claim settlement ratio of the life insurers in 2024
The Insurance Regulatory and Development Authority of India (IRDAI) has recently released the details of claim settlements of all life insurance companies for the year 2022-23. The individual death claim settlement ratio of the life insurance industry was 98.45% in 2022-23. It means that the life insurance industry settled over 98% of the total individual death claim requests received during FY 2022-23. The overall claim settlement ratio was 98.64% in 2022-23.
What is claim settlement ratio by number?
In terms of number of policies settled during 2022-23, Max Life Insurance has the highest claim settlement ratio of 99.51%. With a 99.39% claim settlement ratio, HDFC Life Insurance came second on the list. Aegon Life Insurance bagged the third position with a 99.37% claim settlement ratio.
Claim settlement ratio of life insurance companies 2024 (in terms of numbers)
| Total Claims | Claims paid | Claims Repudiated | |||
| Insurance Company | Number of Policies | Number of Policies | % of Total Claims | Number of Policies | % of Total Claims |
| Max Life | 19659 | 19563 | 99.51% | 96 | 0.49% |
| HDFC Life | 17558 | 17451 | 99.39% | 103 | 0.59% |
| Aegon | 316 | 314 | 99.37% | 2 | 0.63% |
| Edelweiss Tokio | 500 | 496 | 99.20% | 4 | 0.80% |
| Bharti Axa | 2116 | 2097 | 99.10% | 19 | 0.90% |
| PNB Met Life | 5292 | 5242 | 99.06% | 48 | 0.91% |
| Bajaj Allianz | 15502 | 15353 | 99.04% | 145 | 0.94% |
| Tata AIA | 5475 | 5421 | 99.01% | 53 | 0.97% |
| Canara HSBC OBC | 2119 | 2098 | 99.01% | 19 | 0.90% |
| Pramerica Life | 753 | 744 | 98.80% | 8 | 1.06% |
| Aviva | 803 | 793 | 98.75% | 10 | 1.25% |
| Reliance Nippon | 8759 | 8635 | 98.58% | 122 | 1.39% |
| LIC | 922207 | 908576 | 98.52% | 8003 | 0.87% |
| Kotak Mahindra | 4333 | 4257 | 98.25% | 65 | 1.50% |
| Aditya Birla Sun Life | 6314 | 6195 | 98.12% | 119 | 1.88% |
| Sahara | 657 | 643 | 97.87% | 7 | 1.07% |
| Shriram | 4003 | 3899 | 97.40% | 86 | 2.15% |
| SBI Life | 36896 | 35807 | 97.05% | 1007 | 2.73% |
| India First | 3147 | 3054 | 97.04% | 83 | 2.64% |
| Exide Life | 2143 | 2063 | 96.27% | 30 | 1.40% |
| Star Union | 1806 | 1735 | 96.07% | 68 | 3.77% |
| Ageas Federal | 1445 | 1388 | 96.06% | 45 | 3.11% |
| ICICI Prudential | 14333 | 13656 | 95.28% | 638 | 4.45% |
| Future Generali | 988 | 939 | 95.04% | 49 | 4.96% |
| Private Sector Total | 154917 | 151843 | 98.02% | 2826 | 1.82% |
| Grand Total | 1077124 | 1060419 | 98.45% | 10829 | 1.01% |
Source: IRDAI
LIC alone settled over 9.22 lakh claims during 2022-23. Meanwhile, the private insurance sector paid 1.54 lakh claims during the same period.
The claims repudiated ratio indicates how many claims the insurer finds to be invalid and hence, has not paid the claimed amount. There could be many reasons why a life insurance company will repudiate a claim after it has accepted it for processing.
Near to 100% shows how efficient the insurance company is in settling claims. If a policyholder wants to get a sense of how easy it is to file a claim and how those claims are being processed and paid by the insurer, a claim settlement ratio by numbers can be a useful indicator.
Claims paid by amount: What policyholders must know
The claim paid ratio by amount indicates the percentage of the total value of claims submitted to an insurance company that is ultimately paid out. A high ratio would suggest that the company is paying out a large proportion of the total value of claims submitted to it, while a low ratio would suggest that the company is denying or delaying many claims. Both claim-paid ratios by numbers and claim-paid ratios by amount are used to measure the financial performance of an insurance company and to assess its ability to pay out claims to policyholders.
Claim settlement ratio of life insurance companies 2024 (by amount)
| Total Claims | Claims paid | ||
| Insurance Company | Benefit Amount (₹crore) | Benefit Amount (₹crore) | Claim paid ratio |
| Aegon | 86.69 | 86.14 | 99.37% |
| Aviva | 98.85 | 97.60 | 98.74% |
| Bharti Axa | 150.73 | 147.85 | 98.09% |
| Pramerica Life | 30.59 | 29.82 | 97.50% |
| HDFC Life | 1440.20 | 1389.90 | 96.51% |
| Sahara | 5.50 | 5.31 | 96.49% |
| Canara HSBC OBC | 193.76 | 186.19 | 96.09% |
| PNB Met Life | 425.34 | 407.33 | 95.77% |
| LIC | 19327.63 | 18397.77 | 95.19% |
| SBI Life | 1766.28 | 1676.95 | 94.94% |
| Max Life | 1312.47 | 1242.15 | 94.64% |
| Tata AIA | 821.70 | 776.70 | 94.52% |
| Bajaj Allianz | 639.80 | 603.03 | 94.25% |
| Kotak Mahindra | 341.83 | 320.92 | 93.88% |
| Edelweiss Tokio | 63.05 | 59.02 | 93.61% |
| Star Union | 121.33 | 113.46 | 93.51% |
| Reliance Nippon | 219.26 | 204.06 | 93.07% |
| Aditya Birla Sun Life | 496.96 | 458.32 | 92.23% |
| India First | 173.40 | 159.81 | 92.17% |
| ICICI Prudential | 2142.35 | 1949.70 | 91.01% |
| Ageas Federal | 67.47 | 61.05 | 90.48% |
| Exide Life | 114.33 | 100.52 | 87.92% |
| Future Generali | 41.05 | 32.81 | 79.94% |
| Shriram | 141.05 | 109.49 | 77.63% |
| Private Sector Total | 10893.98 | 10218.15 | 93.80% |
| Grand Total | 30221.61 | 28615.92 | 94.69% |
Source: IRDAI
In terms of benefit amount paid against the claim, Aegon Life Insurance recorded a 99.37% claim settlement ratio. Aviva Life Insurance recorded a claim settlement ratio of 98.74%, according to IRDAI data. With a 98.09% claim settlement ratio, Bharti Axa Life Insurance came in the third position.
"The claims paid ratio by amount can be useful for policyholders who are more interested in the amount of money they might expect to receive if they file a claim," said Sanjiv Bajaj, Jt. Chairman & MD, Bajaj Capital.
To get a holistic idea about the claim-paying ability of the insurance company, a policyholder must check and compare both the claim settlement ratio by number and the claim paid ratio by benefit amount before buying the insurance policy.
( Originally published on Mar 01, 2024 )
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