However, in terms of duration of settlement of claims arising out of death of policyholders, majority of individual policies were settled after three months.
Thanks to LIC, the claim settlement ratio of life insurance companies has slightly improved in FY 2013-14. The claims arising out of death of the insured has marginally increased from 96% in FY 2012-13 to 97% in FY 2013-14. Under group policies, such claims settlement stood at 96%, shows an annual report released by IRDA.
Claim settlement ratio is the number of claimed 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. However, the data for the latter is not available with the regulator.
Note: Figures have been rounded off
In its annual report, IRDA stated that life insurance companies had settled a total of 8.6 lakh claims on individual policies, with a total payout of Rs.10,861 crore during FY 2013-14. However, the companies had rejected 18,423 policies amounting to Rs.624 crore. The number of outstanding complaints was 8500 and the amount involved was Rs.450 crore in the preceding fiscal.
On group policies, IRDA data showed that the total claims received this year were 4.1 lakh along with 14,333 pending claims of previous year. The insurers had settled close to 4 lakh claims in FY 2013-14.
The death claim settlement ratio of LIC was higher than the private life insurers. As the above table shows, LIC’s death claim settlement ratio was much higher at 98% and 100% respectively in individual and group policies as compared to 88% and 91% in case of private insurers in FY 2013-14. Private insurers had posted death claim settlement ratio of 89% under individual policies in FY 2012-13.
Among the private players, ICICI Prudential, HDFC and Max Life topped the chart with settlement ratio of 94% each in individual death claims. This was followed by SBI Life, Bajaj Allianz and Kotak Mahindra with death claim settlement ratio of 91% each in individual policies.
Of the 23 private insurance companies, ten have crossed 90% mark in claim settlement ratio of individual policies. However, in group category, most of the private companies had fared better.
While the private insurance firms had rejected close to 8% claims in FY 2013-14, LIC had repudiated only 1% in FY 2013-14. The data showed that private insurers had 4% of claims pending in FY 2013-14 against 1% of LIC.
However, in terms of duration of settlement of claims arising out of death of policyholders, private insurance companies had outpaced LIC with 74% of individual policies settled in less than 3 month period compared to only 17% of public sector giant. Majority of death claims under individual policies were settled after three months.