LIC, the big daddy among insurers, has settled 99.52% of claims in 2014-15 amounting to a whopping Rs 9055.18 crore arising out of 7.42 lakh death claims.
The number of claims settled by insurance companies is on the rise with more than 90% of death claims being settled.
A random study of statistics of some of the leading insurance companies shows that claims settled are as high as upwards of 95% in many cases. The official annual report of the Insurance Regulatory Development Authority (IRDA) for 2014-15 is yet to be released. The information for this article has been sourced from published data from company websites or information provided by the companies.
LIC, the big daddy among insurers, has settled 99.52% of claims in 2014-15 amounting to a whopping Rs 9055.18 crore arising out of 7.42 lakh death claims. ``The number of claims being settled in LIC is far higher than any other life insurance company,'' said informed sources in LIC. The percentage of outstanding claims for LIC is 0.48%.
Among private sector insurers, Kotak Life Insurance has reported that it has settled 98.29% of claims during 2014-15. This includes individual as well as group claims.
Max Life Insurance has reported a payment ratio of 97.23% in the last fiscal year, up from 93.86% in the preceding fiscal. These include individual claims only.
"Individual death claim settlement is the true barometer of claims management of a life insurance company. Rejection of claim is almost negligible in group policies as there are minimal chances of any misrepresentation or fraud by employees in group insurance. Hence, the companies who have higher portfolio of claims from group insurance will be able to show better claim payment ratios," says V Viswanand, sr. director & chief operating officer, Max Life Insurance.
However, Sunil Sharma, chief actuary of Kotak Life Insurance says, ``In the group business, the cover is provided individually. Only that it is administered by the group master policy holder. Thus, while individual policies are important, group business is equally important.''
``Birla Sun Life Insurance (BSLI) has achieved 95.30% individual claim settlement ratio for 2014-15,'' says Mayank Bathwal, deputy CEO, Birla Sun Life Insurance.
Star Union Dai-Ichi Life Insurance (SUD Life), a joint venture of Bank of India, Union Bank of India and Japan-based Dai-ichi Life, has settled 96.27% claims during 2014-15.
If proof of the pudding is in the eating, then the mark of a good insurance company is in how good they are when it comes to claims settlement. After all, what is the point of paying premiums month on month if the company does not settle the claim to the satisfaction of their clients, feel customers.
In the past, customers have complained of delays in settlement of claims by insurers as they take too long to process claims and make them run from pillar to post.
Regarding the delays in settlement of claims, Girish Kulkarni, MD & CEO, SUD Life, says, "Non-submission of complete claim documents by the claimant and early death claims that warrant claim investigation are the main problems that lead to delayed settlements of claims."
Customers claimed that the insurance companies reject their claims on grounds of delay in intimation and submission of documents.
"It is important and advisable to complete the proposal form carefully and not as a mere formality. Given that insurance is a contract and duly completed proposal form along with other information/ documents/ KYC are the basis for contract, this needs to be given due attention,'' says Mr Bathwal.
According to IRDA regulations, insurance companies have to complete investigation of death claims within 6 months from the date of filing of claim. Besides, the life insurer has to pay or has to give the reasons for disputing the claim within 30 days of receipt of all relevant papers. In addition, insurance companies cannot reject claims filed on policies where the premiums have been paid by the customer for more than 3 years.
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