I was working on my laptop doing some business analysis. Small voice was coming from a distance. Suddenly the voice became loud, my risk manager was talking to a lady about a claim settlement. The lady had recently lost her husband and the claim was rejected. Reason ???
The husband had taken the insurance policy without disclosing the material facts. He was a diabetic and the fact was not disclosed. The lady was begging to settle the claim as she was not working, and my manager did not budge.
It’s a very traumatic situation losing your loved ones with no money to survive.
My mind was revolving around those thoughts, and suddenly my friend rushed in. He wanted to take some suggestions for tax savings and was interested in buying a Life Insurance policy. Being a member of various financial groups on Facebook and a reader of various financial blogs, he was keen to take a policy from a company having high Claim Settlement Ratio. LIC was his first choice and thereafter various other private insurers. He was quite sure that the claim will be settled, if he takes a policy from the biggies, if something happens to him. Was he right in his thoughts?
To some extent ‘yes’ and to some extent ‘no’. Yes… everybody will understand…
No… Let us check some facts about Claim Settlement Ratio… and you need to give me your views on the no…. part
IRDA Claim Settlement Ratio 2012-13 – How it is calculated?
IRDA divides its Claim Settlement Ratio in 3 parts:
- Claims Settled
- Claims Rejected
- Claims Pending
- Claims Settled = Claims Settled/Total No. of Claims Reported* 100
- Claims Rejected = Claims Rejected/Total No. of Claims Reported* 100
- Claims Pending = Claims Pending/Total No. of Claims Reported* 100
IRDA Claim Settlement Ratio – Important Facts
IRDA publishes Claim Settlement Ratio on total no. of policies as well as on the value.
Claim Settlement Ratio is on no. of policies and as well as on the value.
The value figures are in the brackets.
How many high value death claims have been settled?
Taking the point no. 2, out of 10; how many high value death claims have been settled. Suppose, if 7 policies are settled with a sum assured of Rs. 20 lacs each and 3 policies are rejected having a sum assured value of Rs. 50 lacs each. My Claim Settlement Ratio is pathetic in that case.
Total claims include claims received this year + Claims pending from previous year
Claim Settlement Ratio includes both this year’s claims and claims pending from previous years. Though this may not be relevant in terms of ratio, but so many claims just lie in company’s suspense account as claimants’ family members do not even know that their beloved one had taken an insurance policy. So, be sure to tell it to your family members about your financial investments.
Claims Settlement Ratio for Term Insurance cannot be calculated as the report includes all the policies
The report includes all the policies. Ulips, Endowment, Money Back, Term Insurance. So, if you want to calculate the Claim Settlement Ratio of Term Insurance policies… you cannot.
So, be sure to disclose all the material facts while buying an insurance policy, because Claim Settlement Ratio never tell us that how many death claims were settled and out of those, how many were of high values.
If you are having some health issues and taking the policy (without mentioning the facts in the proposal) from the company with highest claim settlement ratio, the claim can be rejected. But if you are taking the policy after mentioning all such details, all company will settle the claim. All these companies are controlled by IRDA and above that we have consumer forums to protect the genuine claims.
I must have missed a few points, which Claim Settlement Ratio does not tell us. Help us to add the missing points.