Insurance companies with improved claim settlement ratio

Insurance Regulatory & Development Authority of India (IRDAI) publishes annual report every financial year wherein, it provides a detailed view on the insurance as an industry. In this report, it publishes quite important information pertaining to the insurance companies such as claim settlement ratio, claims rejection ratio, incurred claims ratio (general insurance section) and a lot more. In this article, we would be looking at the insurance companies, having claim settlement ratio that has improved in the past five years. However, before we dive into it, let us first understand what claim settlement ratio is. For those who already know, they can straight away jump to the next section of the article. 

What is claim settlement ratio? 

The claim settlement ratio (CSR) is the indicator that shows the number of death claims settled by the life insurer in any financial year. In order to calculate it, you need to divide the total number of claims settled by the total number of claims received. Say, for instance, the life insurer received 1,000 claims and of those, it settled around 950 claims then, in such a case, the CSR would be 95 per cent (950/1,000). And the remaining 2 per cent claims are either rejected or are carried forward to the next financial year, or both. 

Quite fascinating, isn’t it? It seems easy to pick term plans but then, beware! CSR, being raw data, can seriously mislead you if looked at it in isolation. Therefore, it makes much more sense to also look at the average amount of claim settled, policy features and the premium that these insurance companies charge. 

Having said, let us have a look at the life insurers, who have improved their CSR in the past five years. 

Shriram Life Insurance Company improved the most in the past five years in terms of CSR, followed by IndiaFirst Life Insurance Company and Bharti AXA Life Insurance Company. Though, these are not the only one which witnessed an improvement, but also the ones which saw double-digit improvement. This essentially increases the confidence in the company and if you see, except for Shriram Life Insurance Company, all others have the CSR of above 95 per cent. 

Again, this is just a single parameter. In order to make a buying decision, you should take a holistic view by also considering other parameters such as average claim settlement amount, average claim rejection amount, premiums, etc. Also, remember to carry out a life insurance adequacy analysis before you buy one!