LIC's claim settlement ratio deteriorated in FY20 to 96.6%

MUMBAI: Life Insurance Corp. of India (LIC) saw its claim settlement ratio deteriorate marginally in FY20 to 96.6% from 97.7% in FY19 even as private insurers increased their settlement ratio to 97.18% from 96.6% in this period.

The life insurance industry in total paid 8.46 lakh claims on individual policies, with a total payout of Rs 18042 crore in the FY20, data from the latest Insurance Regulatory and Development Authority of India’s annual report showed. Claim settlement ratio is a metric to gauge the percentage of life insurance claims an insurer has settled during a financial year against the number of claims it receives in the period.

The higher the ratio, the better the insurer has performed in addressing the claims it receives. An insurer can reject a death claim on multiple grounds which are subject to the terms and policies of the insurance cover. For FY20 the life insurance industry repudiated 8,927 claims worth Rs 555 crore and rejected 2,262 for an amount of Rs 20 crore, data from the report showed.

Private sector life insurer Max Life had the highest claim settlement ratio for the industry at 99.2% followed by HDFC Life and TATA AIA – with a settlement ratio above 99%. Edelweiss Tokio Life and Sahara Life had among the worst settlement ratios at 83.4% and 89.4% respectively, the data showed.

Of the 24 life insurers, LIC came at 17th while private insurer ICICI Prudential NSE 0.20 % was at tenth spot with a settlement ratio of 97.8%. In the group life business, out of 10.26 lakhs total number of the group claims payable during FY20, life insurance industry paid a total of 9.98 lakh claims which is 97.27 per cent.

“While LIC paid 91.08 per cent of the claims, the private life insurers paid 98.94 per cent of the claims. The industry repudiated 0.20 per cent of the claims and rejected 0.05 per cent of the claims,” IRDAI said in the report.

Source: The Economic Times