When purchasing a life insurance policy, the company’s claims settlement ratio is an important consideration to consider.
The claim settlement ratio is a measure that compares the percentage of life insurance claims that an insurer has settled over a financial year to the total number of claims received, including pending claims from the previous year
“In respect of individual life insurance business, during the year 2020-21, out of the total 11.01 lakh claims, the life insurers paid 10.84 lakh claims, with a total benefit value of Rs 26,422 crore,” according to the Insurance Regulatory and Development Authority of India’s (IRDAI) annual report. There were 9,527 claims repudiated for a total of Rs 865 crore, while 3,032 claims were denied for a total of Rs 60 crore.
LIC’s claim settlement ratio was 98.62 percent as of March 31, 2021, compared to 96.69 percent as of March 31, 2020, while the proportion of claims repudiated/rejected was 1.0 percent in 2020-21, down from 1.09 percent the previous year.
Private insurers’ claim settlement ratio was 97.02 percent in 2020-21 (compared to 97.18 percent in 2019-20), while the proportion of repudiations fell to 2.0 percent in 2020-21 from 2.50 percent the previous year.
According to the IRDAI annual report, “the life insurance industry’s settlement ratio climbed to 98.39 percent in 2020-21 from 96.76 percent in 2019-20, while the repudiation/rejection ratio declined to 1.14 percent from 1.28 percent in 2019-20.”
The medical costs of COVID19 have been enormous for patients, and a large number of individuals have died as a result.” As a result, in the previous two years, the reliance on insurance firms has expanded dramatically. As a result, during a pandemic, the claim settlement ratio becomes even more important to ensure that the insurance company can offer services to the policyholder, whether for hospitalization or death, as promised by them to seek quick access to medical facilities.
A reputable insurance company should not only honor all valid claims but also handle them as fast as possible.
“The claim settlement ratio demonstrates the insurance company’s prior performance in settling claim cases raised by customers and provides transparency on the insurance company’s performance for new clients.” The percentage is computed by comparing the claims that have been settled to the claims that have been raised by consumers.
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