Times have changed and so have people. Modernisation has become the key word for people. Despite private players entering in the life insurance sector, Life Insurance Corporation (LIC), a public sector major and one of the oldest insurance company of India, still leads all the other private insurance companies when we compare the death claim settlement ratio.
According to figures released by IRDA, LIC has settled 95.48% of death claims for the year ending March 2009 as against the claims of 82.26% for the private companies. Also the percentage of claims repudiated stands as high as 9.97% in case of private insurance companies as compared to which the percentage of death claims repudiated stands at 1.33% for LIC. Despite the private companies trying to cope with the state-run major, they still lag behind LIC.
"LIC is a good pay master as compared to other insurance companies. The company repudiates a claim only under concrete reason when a fraud is detected. Also the 3-tier system of reviewing the repudiations makes it perform better," said MK Kemmu, Sr divisional manager at LIC. Another senior LIC official said, "The widespread reach of LIC helps it settle claims on time and with efficiency, thereby helping it serve better."
The life insurance companies have settled 6.05 lakh claims on individual policies with 12,781 claims repudiated. Among the total claims pending, 2,574 were pending for more than one year and 2,875 were pending for more than 6 months and less than 1 year.
Whereas LIC made a settlement worth Rs4165.1 crore (93.72%) for the individual death claims, private companies made a settlement of Rs633.12 crore (75.84%).
An expert from insurance sector explained that due to the high amount of fraudulent cases, non-disclosure of correct medical information while taking a policy leads to higher repudiation among the private companies. Also, the old system of long formalities for taking a life insurance seems to have reduced. Now with easy procedure for buying an insurance policy with an option of online policy also available, some important information in case of health matters can be missed thereby increasing the repudiation. Also the trend of buying policies for the sake of medical treatment increases the repudiations.
Among the private insurance companies, Bharti Axa Life Insurance with 44.83% of claims repudiated stands at the highest leaving Aegon Religare which has 71.43% of claims pending. A senior official from Aegon said that, "The company is still in the starting stage. And thus it is difficult to compare it with other insurance companies which have long been in this business."
Whereas Abhinav Rahul, VP - corporate communication, Max Newyork Life Insurance said, "The main reason why claims are rejected is non-disclosure of correct health-related information.
The unawareness among the people regarding the clauses of the policy also adds to the reason. Also at times it is seen that the agents do not realise the seriousness of the policy details and thus fail to gather all info."
An official from a private insurance company said, "Private insurance companies are comparatively new in the business. When we compare the death claim ratio of LIC with private life insurance companies, the existence of a particular company is important. If a company has been in existence for more than 5 years then it surely worth investigating as to what is the reason behind the high rate of claim rejection and repudiation."