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Insurance Max Life ahead of LIC in settling individual death claims

Max Life ahead of LIC in settling individual death claims

Max Life overtakes LIC to clinch the top spot in terms of individual death claim settlement ratio.
Shreeta Rege Feb 5, 2019

For years, LIC continued to maintain top spot in terms of both individual and group death claim settlement ratio.

However, last fiscal, private insurer Max Life has overtaken LIC India in settling individual death claims. While Max Life has a claim settlement ratio of 98.26%, LIC has settled 98.04% individual death claims.

Similarly, Tata AIA (99.83%) was marginally ahead of LIC (99.80%) in terms of group death claims.

 Private insurers death claim settlement ratio stood at 95.24% and 99.20% in individual and group policies respectively.

On a positive note, there has been a 1.52% increase in individual death claim settlement ratio of private insurance companies in FY 17-18 compared to the previous fiscal. However, LIC saw a marginal decline in its number from 98.31% in FY 16-17 to 98.04% in FY 2017-18.

Claim settlement ratio is the number of claims settled to the total number of claims registered in a financial year. There are two types of claims – claims arising out of death i.e. death claims and claims settlement on maturity of policies like endowment policies, ULIPs etc. Typically, policyholders don’t face any problem with regard to claim settlement for the latter. In case of claims arising out of death, death claim settlement record of the company indicates the likelihood of an insurer to make good the losses.

In its annual report, IRDAI stated that life insurance companies had settled a total of 8.28 lakh claims on individual policies, amounting to Rs.14,624 crore during the fiscal. The companies also rejected 9,286 claims totalling Rs. 532 crore.

Among the private players, Max Life and Tata AIA topped the chart with settlement ratio of 98% or above in individual death claims. ICICI Prudential, HDFC Standard Life followed these two with death claim settlement ratio of over 97%.

In group policies, the industry received 7.66 lakh claims of which the insurers settled close to 7.61 lakh claims or 99.42% claims last financial year.

Claim settlement ratio FY 2017-18

Insurance Companies

Individual death claim settlement ratio

Group death claim settlement ratio

LIC

98.04%

99.80%

Max Life

98.26%

99.01%

Tata AIA

98%

99.83%

ICICI Prudential

97.88%

98.96%

HDFC Standard Life

97.80%

99.27%

SBI

96.76%

99.35%

Aditya Birla Sun Life

96.38%

99.35%

Reliance Life

95.17%

99.06%

Kotak Mahindra

93.72%

99.70%

Bajaj Allianz

92.04%

99.60%

PNB Met Life

91.12%

96.19%

Private total

95.24%

99.20%

Industry total

97.68%

99.42%

 Source: IRDAI

Claim settlement duration

In terms of the duration of settlement of claims arising out of death, private insurance companies were significantly faster than LIC.  The IRDAI annual report shows that private insurers settled 72.55% of individual claims in less than three months as compared to 45.17% by LIC last fiscal. In the six-month period though, both LIC and private insurers settled nearly 90% of their claims.

Overall, the insurance industry has settled close to 60.13% individual death claims in less than three months and 29.74% of the claims in 3 to 6 month period.

Claims repudiation

Claim repudiation or rejection for individual policies declined marginally for both LIC and private players compared to last year. Private insurance firms rejected 3.97% claims last financial year down from 4.85% the year before. Meanwhile LIC’s claim repudiation ratio fell to 0.67% in FY 17-18 from 0.97% in the previous year. Some companies like India First Life (10%) and Shriram Life (17.80%) have relatively high claims repudiation ratio. Typically, newer insurance companies see higher rejection ratio as they may receive large number of early claims. Early claims are those, which arise within three years from the date of issuance of policies. Insurance companies closely scrutinize such policies to see if they are fraudulent.

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1 Comment
Rakesh Belludi · 2 months ago
Of late cafe mutual is less of mutual fund teacher but more of a life insurance preacher
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