Claim Settlement Ratio

What is Claim Settlement Ratio?

In the simple words claim settlement ratio is defined as the percentage of insurance claims settled by an insurer compared to the total number of received claims. In other words, we can understand the claim settlement ratio reveals the percentage of claims the insurance company has paid out during the financial year.

Let understand CSR with the example, if a life insurance company receives 2000 death claims and settles 1998, the claim settlement ratio of that company would be 99.9%. It means higher the claim settlement ratio of the insurer, the more favourable it would be for individuals.

The CSR is calculated with the help of the following formula:

Claim settlement ratio = (Number of claims settled/Number of claims received) x 100

Check the table below shows IRDAI’s death claim settlement ratio of life insurers for the year 2018-19

Check the latest death claim settlement ratio of the 24 life insurance companies in India in descending order.

 

S.No.	Life insurers	Death claim settlement ratio (%)
1	TATA AIA Life Insurance	99.07
2	HDFC Life Insurance	99.04
3	Max Life Insurance	98.74
4	ICICI Prudential Life Insurance	98.58
5	Life Insurance Corporation	97.79
6	Reliance Nippon Life Insurance	97.71
7	Kotak Life Insurance	97.4
8	Bharti Axa Life Insurance	97.28
9	Aditya Birla Sun Life Insurance	97.15
10	Exide Life Insurance	97.03
11	DHFL Pramerica	96.8
12	Star Union Daichi Life Insurance	96.74
13	Aegon Life Insurance	96.45
14	PNB MetLife Insurance	96.21
15	Aviva Life Insurance	96.06
16	Edelweiss Tokio Life Insurance	95.82
17	IDBI Federal Life Insurance	95.79
18	Future Generali Life Insurance	95.16
19	SBI Life Insurance	95.03
20	Bajaj Allianz Life Insurance	95.01
21	Canara HSBC OBC	94.04
22	India First Life Insurance	92.82
23	Sahara India Life Insurance	90.16
24	Shriram Life Insurance	85.3

Source: IRDAI Annual Report 2018-19

Check the IRDAI death claim settlement ratio of life insurers for the year 2018-19, 2012-13

Company	2018-19	2017-18	2016-17	2015-16	2014-15	2013-14	2012-13
TATA AIA Life	99.07%	98.00%	96.01%	96.80%	95%	89.68%	84.46%
Max Life	98.74%	98.26%	97.81%	96.95%	96.03%	93.86%	94.25%
ICICI Prudential	98.58%	97.88%	96.68%	96.20%	94%	94.01%	96.29%
LIC	97.79%	98.04%	98.31%	98.33%	98%	98.14%	97.73%
Reliance Life	97.71%	95.17%	94.53%	93.82%	84%	81.97%	86.45%
Kotak Mahindra	97.40%	93.72%	91.24%	89.09%	91%	90.69%	92.04%
Bharti Axa Life	97.28%	96.85%	92.37%	80.02%	81%	88.13%	89.48%
HDFC Standard	97.15%	97.80%	97.62%	95.02%	91%	94.01%	95.76%
Birla Sunlife	97.15%	96.38%	94.69%	88.45%	96%	87.76%	82.55%
Exide Life	97.03%	96.81%	96.40%	89.36%	86%	83.16%	N/A
DHFL Pramerica	96.80%	96.62%	90.87%	83.64%	57%	22.14%	27.04%
Star Union Daichi	96.74%	92.26%	84.05%	80.73%	94%	92.86%	89.70%
Aegon Religare	96.45%	95.67%	97.11%	95.31%	90%	81%	66.82%
PNB Metlife	96.21%	91.12%	87.14%	85.36%	93%	90.24%	83.87%
Aviva Life	96.06%	94.45%	90.60%	81.97%	83%	84%	67.35%
Edelweiss Tokio	95.82%	95.24%	93.29%	85.11%	57%	60%	45.45%
IDBI Federal Life	95.79%	91.99%	90.33%	84.79%	72%	90.34%	80.06%
Future Genrali	95.16%	93.11%	89.53%	90.26%	84%	74.88%	70.53%
SBI Life	95.03%	96.76%	96.69%	93.39%	89%	91.06%	94.41%
Bajaj Allianz	95.01%	92.04%	91.67%	91.30%	92%	91.29%	88.67%
Canara HSBC	94.04%	95.22%	94.95%	92.99%	90%	86.76%	88.44%
India First Life	92.82%	89.83%	82.65%	71.87%	72%	73.13%	71.40%
Sahara Life	90.16%	82.74%	90.21%	90.30%	90%	90.19%	84.71%
Shriram Life	85.30%	80.23%	63.53%	60.24%	67%	67.69%	67.35%

Above mentioned data are taken from IRDA website.

FAQ’S

1. What is the claim ratio?

Total Claims per Period / Total Earned Premiums per Period

2. What is a good claim ratio?

A company with a ratio in the range of 90 % to 97 % is more reliable than a company with a claim settlement ratio in the range of 75 % to 90 %

3. Where is claim settlement ratio IRDA?

The most reliable source for checking the claim settlement ratio of life insurance companies is the IRDAI Annual Report. Which is annually released by IRDA.

4. What is the procedure regarding the settlement of claims?

Claims can be reported online at branches or at the central office or calling at the toll-free number. After validation of all the documents, then the final settlement takes place.

5. Which company has the highest claim settlement ratio?

Tata AIA life insurance has the highest claim settlement ratio of 99.07%

6. Which insurance company is best for claims?

1. TATA AIA Life Insurance
2. HDFC Life Insurance
3. Max Life Insurance
4. ICICI Prudential Life Insurance
5. Life Insurance Corporation
6. Reliance Nippon Life Insurance
7. Kotak Life Insurance
8. Bharti Axa Life Insurance
9. Aditya Birla Sun Life Insurance
10. Exide Life Insurance

7. What is incurred claim ratio?

Incurred Claim Ratio or ICR is the proportion of claims paid out against the total amount of premiums received during a particular financial period.

8. What is the claim settlement ratio of LIC?

98.04%

9. What is a claim life cycle?

1. submission
2. processing
3. adjudication
4. payment/denial

10. Why do insurance claims get rejected?

1. Providing wrong information in the application form
2. Non-disclosure of medical history
3. Not Updating Nominee Information
4. Policy lapse  due to not paying premiums on time
5. Not providing information on existing policy

11. What is the turn around the time period of a settlement insurance claim?

1. Maturity claim will take 15 days
2. Death claim settlement without investigation requirement will take 30days
3. Death claim settlement with investigation requirement will take 120days

12. What is an expense ratio in insurance?

The expense ratio in the insurance industry is calculated by dividing the expenses including (acquiring, underwriting, and servicing premiums) by the net premiums earned by the insurance company.

13. Can insurance companies reject claim after 3 years?

According to Section 45, no claim can be rejected after 3 years of the policy being in force even if any fraud is detected.