What is meant by the Claim Settlement Ratio? How Claim Settlement Ratio helps you to select the life insurance company to insure yourself?
What are the top Insurance companies based on the Claim Settlement Ratio? What are the thumb rules to select Insurance companies?
You will get answers to all the above questions and more in this article.
Table Of Content
Who is Insurance Regulatory And Development Authority Of India (IRDA)?
IRDA(Insurance Regulatory and Development Authority of India) is a supervising body that monitors all insurance companies in India and holds the licensing power.
- They are responsible for preventing policyholder interests.
- One of the major tasks of IRDA is to ensure that genuine claims are settled without any hindrances.
- It has the right to issue, withdraw, renew or cancel licenses for any Insurance company.
What is Claim Settlement Ratio (CSR)?
Claim Settlement Ratio is the ratio achieved by comparing the total number of claims settled to the total number of claims raised by the policyholders. Claim Settlement Ratio plays a vital role during the selection of Insurance companies among individuals to reduce their risk of rejection.
In mathematical representation,
CSR = No. of claims settled by the insurance company / no. of claims raised by the policyholders.
i.e., if an insurance company had received 100 claims, out of that 96 had paid and 4 claims got denied, the Claim Settlement Ratio of that company is 96%.
Decoding ANNUAL REPORT OF CLAIM SETTLEMENT RATIO BY IRDA (2020-21):
An annual report will be generated by them regarding the Insurance Claim Settlement Ratio after 9-10 months from the end of every financial year.
Key Observations From The 2022 Claim Settlement Ratio Data:
- Max Life Insurance holds the first position among all other Insurance companies with a Claim Settlement Ratio of 99.35% during the financial year 2020-21.
- Kotak’s Insurance Claim Settlement Ratio have significantly increased by 2.12% when compared to its previous financial year.
- Private Insures Claim Settlement Ratio had decreased by 0.16% and rejection of claims had decreased by 0.5% compared to the previous financial year.
- Overall Insurance companies Claim Settlement Ratio had increased by 1.63% and rejection of claims had decreased by 0.14%.
- This shows that the insurance companies are paying their policyholders at the right time if the customer’s claim satisfies the eligibility criteria.
- Every year there may be an increase or decrease in terms of the Claim Settlement Ratio of Insurance Companies.
LIC’s Claim Settlement Ratio had increased by 1.93% and rejection of claims had decreased by 0.09%compared to the previous financial year. The total benefit claim amount from all private Insurance companies is less than the benefit claim amount of LIC. This shows the uniqueness among its competitors and the quality of service towards its policyholders.
Magic Of Max Life:
Max Life Insurance holds the first position in terms of the Claim Settlement Ratio released in 2022 by IRDA for the financial year 2020-21. It possesses a maximum Claim Settlement Ratio of 99.35% with an increment of 0.13% when compared to the previous financial year.
Section 45 Of The Insurance Act Will Secure You:
Section 45 of the Insurance Act Strongly states that the Insurance Company cannot deny any claims after three years, even though it had been suspected as fraud.
- The policy can be removed if any suspicion is found with proof by the insurance company before the completion of three years from the date of issuance.
- Insurance company has three years to investigate deeply whether the information is correct.
Is There Anything To Look Upon Rather Than The Claim Settlement Ratio?
ere are more factors to make a good decision. The size of a company is a key factor to be observed during the selection of an Insurance company. We should not just observe the Claim Settlement Ratio of an insurance company, th
For a small company, it’s quite easier to evaluate and decide on issuing new policies, when compared to a big company. They have enough time to work with the given details of the customer to make a quality decision making.
It’s a huge deal for big Insurance companies to sustain in higher positions constantly since they have numerous policyholders around the world.
Thumb Rules For Selecting Insurance Companies:
A company that satisfies the condition (Claim Settlement Ratio >= 95%) will be a better choice. Consistency of Claim Settlement Ratio plays a major role to show their fight against other competitors.
Don’t ignore the terms and conditions of the company, ensure whether your expectations and requirements are listed in their eligibility criteria for claiming.
- Ensure the performance of your desired Insurance Company in both the IRDA Claim Settlement Ratio and the amount paid for the claim.
- Higher the Claim Settlement Ratio, lower the risk and probability of claim rejections.
Few companies having consistent Claim Settlement Ratio greater than 95% are:
- HDFC Life
- Max Life
- ICICI Life
Life is full of uncertainty, anything may happen at any instant. Ensure whether you have insured your valuable life to your desired Life insurance company. This article acts as a magnifying glass to obtain a clear image on selecting the right life insurance company to insure you with the latest 2022 data of Life Insurance claim settlement ratio released by IRDA.
If you have any comments or questions, write them in the comment box below.
Or are you interested in creating a Comprehensive Financial Plan for your financial goals?
Skip the queue by registering for your 30 Minute FREE Financial Plan Consultation. Click the ‘Register Now!’ button below.