The life insurance industry settled an average of 97.56% of claims filed on life insurance policies in fiscal year 2020-21, according to the latest report from the Insurance Regulatory and Authority of India (Irdai) published in December 2021. The claims settlement rate increased from 96.76% in 2019-2020, according to data from Irdai.
The claims settlement ratio shows the number of claim payments that have been settled by a life insurance company each year as a percentage of the total number of claims it receives. The data does not reflect life insurance claims raised after the second wave of Covid-19 as it started from April 2021.
Why is it important to check the claims settlement ratio?
As a rule, claims are issued upon the death of the policyholder. The claims ratio shows how many claims an insurer has paid out of the claims received. In other words, the claims settlement ratio roughly shows the probability that an insurer will make the payment when a claim arises.
The main reason to buy a life insurance policy is to make sure that the dependents get the sum insured or financial protection in the event of the death of the policyholder. Therefore, it becomes important to know a life insurance company‘s history of settling death claims.
It is also like checking the performance of an insurance company. “This track record of insurance companies helps future clients identify the service they provide so that they can select the right insurance company to be their insurance partner and be assured that their claims will also be settled without too much. of problems for their families or beneficiaries at the time of need, ”says Naval Goel, founder and CEO of PolicyX.com, a web-based insurance aggregator.
High claims settlement ratio in fiscal year 21
In FY21, 21,836 claims were reported, of which 21,304 were settled, an average claim resolution rate of around 97%, according to the report (Irdai).
When the pandemic hit, Irdai called on all life and health insurance companies to speed up the claims settlement process.
According to the report, Max Life Insurance led in claims settlement with a ratio of 99.35 percent. The insurer was even in the lead last year. Aegon Life Insurance and Bharati AXA Life Insurance came in second and third with ratios of 99.25 percent and 99.05 percent, respectively. India’s largest insurer, Life Insurance Corp. of India, settled 98.62% of claims and took fourth place on the list, down from 16th last year. Pramerica Life Insurance achieved a ratio of 98.61 percent and placed fifth.
Why are death requests rejected?
There can be several reasons behind the rejection of claims. The main reason is non-disclosure or poorly stated facts. Sometimes people tend to forget or hide their health problems which lead to death. This often leads to a denial of a claim.
“The basics of life insurance remain the same in whatever situation every client needs to keep in mind, i.e. never hide or falsify details of their health such as pre-existing illnesses, habits like smoking or drinking when purchasing life insurance, so there’s no scope for misinformation, ”Goel says.
Other factors could be non-payment of the premium, delay in filing the claim, not mentioning the candidate, an incorrectly completed claim form, etc.
It is also crucial that you fill in the correct candidate details, so that your dependents have no trouble getting the claim. Most of the time, the candidate should carefully complete the claim settlement form and attach the correct police documents and medical reports so that there is no delay or rejection.