The Insurance Regulatory and Development Authority of India (IRDAI), in its latest annual report, has given details of claim settlements of all life insurance companies for the year 2019-20. Max Life Insurance has the highest claim settlement ratio in terms of number of claims with 99.22%. This is followed by HDFC Life Insurance and Tata AIA Life Insurance with 99.07% and 99.06%, respectively. Out of the top 10 life insurers, nine have a claim settlement ratio of more than 98%.
The biggest life insurance company, LIC of India has a claim settlement ratio of 96.69% for the year 2019-20.
Top 10 life insurance companies by number of policies settled
| Individual death claims settlement by % of policies | |||||
| Total Claims | Claims paid | Claims Repudiated | |||
| Insurer | Number | Number | % of Total Claims | Number | % of Total Claims |
| Max Life | 15463 | 15342 | 99.22% | 120 | 0.78% |
| HDFC | 12626 | 12509 | 99.07% | 54 | 0.43% |
| Tata AIA | 2982 | 2954 | 99.06% | 28 | 0.94% |
| Pramerica Life | 569 | 560 | 98.42% | 7 | 1.23% |
| Exide Life | 3468 | 3404 | 98.15% | 26 | 0.75% |
| Canara HSBC OBC | 1276 | 1252 | 98.12% | 22 | 1.72% |
| Reliance Nippon | 8017 | 7866 | 98.12% | 149 | 1.86% |
| Bajaj Allianz | 12127 | 11887 | 98.02% | 237 | 1.95% |
| Aegon | 351 | 344 | 98.01% | 7 | 1.99% |
| ICICI Prudential | 11460 | 11212 | 97.84% | 153 | 1.34% |
| Source: IRDAI Annual Report 2019-20 | |||||
Claims repudiated is basically how many claims the insurer found to be invalid and hence, did not pay the claimed amount. There are many reasons a life insurance company will repudiate a claim after it has accepted it for processing.
Don’t forget to check the settlement ratio for the benefit amount
One should not only look at the number of claims settled, but while buying an insurance policy, one should also check the benefit amount that the life insurer has settled. A life insurance company may have a higher percentage of claim settlement by number of policies but a lower percentage when it comes to paying the benefit amount. This happens especially when the life insurance pays higher number of claims of lower benefit amounts and repudiates policies with higher benefit amount, i.e., policies with higher life insurance cover.
Therefore, while selecting an insurance policy, make sure that the insurer scores well on both claims settlement ratio and the benefit amount settled.
Top 10 life insurance companies by benefit amount settlement
| Individual death claims settlement by % of benefit amount | ||||||
| Total Claims | Claims paid | Claims Repudiated | ||||
| Insurer | No. of Policies | Amount (Rs Cr) | Amount (Rs Cr) | % of Total Claims | Amount (Rs Cr) | % of Total Claims |
| Aviva | 810 | 83.33 | 80.78 | 96.94% | 0.97 | 1.16% |
| Tata AIA | 2982 | 231.96 | 222.47 | 95.91% | 9.49 | 4.09% |
| Pramerica Life | 569 | 23.43 | 22.44 | 95.78% | 0.77 | 3.28% |
| Bharti Axa | 1320 | 64.29 | 61.56 | 95.75% | 1.58 | 2.45% |
| Star Union | 1248 | 53.29 | 50.47 | 94.71% | 2.1 | 3.93% |
| Max Life | 15463 | 595.43 | 562.54 | 94.48% | 32.88 | 5.52% |
| Reliance Nippon | 8017 | 167.03 | 157.03 | 94.01% | 9.43 | 5.64% |
| Aegon | 351 | 69 | 64.6 | 93.63% | 4.4 | 6.37% |
| Bajaj Allianz | 12127 | 332.15 | 310.71 | 93.55% | 20.78 | 6.26% |
| LIC | 758916 | 13694.34 | 12797.85 | 93.45% | 205.02 | 1.50% |
| Source IRDA Annual Report 2019-20 | ||||||
Size matters
Though these are the insurance companies with the highest percentage of claims settled, one needs to understand that the size of an insurance company also plays an important role in maintaining a higher claim settlement ratio. It becomes a challenge for big life insurance companies with a large policyholder base to remain in the top bracket in the claim settlement ratio table.
For a smaller insurer, it is easier to have tight control on the underwriting checks and balances at the time of issuing a new policy. These checks allow the insurance company to conduct a thorough investigation at the time of issuing a policy to avoid any policies which may have higher risks than the acceptable underwriting parameters. The same happens with the claim settlement process. As the base grows, it becomes challenging to maintain the same quality of scrutiny.
LIC versus private insurers
While all the private life insurance companies put together had 1.16 lakh claims to be settled in the year 2019-20, LIC had a 7.58 lakh claims for settlement. The total benefit amount claimed from private life insurance companies was Rs 5,725 crore where as LIC had a total benefit claim amount of Rs 13,694 crore. With such a huge base, it is remarkable that the biggest life insurance company, LIC of India has performed quite well to maintain a settlement ratio of 96.69% by number of policies and 93.45% by benefit amount and be in top bracket.
