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Claim Settlement Ratio 2125 views October 16, 2020
LIC has been in the insurance business in India since 1956. It is among the most trustworthy companies in India with more than 250 million customers. LIC has a range of life insurance products such as term insurance, endowment insurance, child plans, unit-linked plans (ULIP), etc. LIC health insurance plans are made to help you meet the rising medical costs. LIC insurance plans offer impressive coverage and benefits to its policyholders. The company also believes in settling the claims of its customers quickly and efficiently. That is why LIC has a high Claim Settlement Ratio. Read the post and know what the LIC Claim Settlement Ratio means while you are buying a policy and how it will help you make the right decision.
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Let’s Talk What Claim Settlement Ratio Means
A Claim Settlement Ratio is a percentage of claims in which an insurance company settles against the total number of claims made in a financial year. Who publishes a claim settlement ratio in India? The Insurance Regulatory and Development Authority of India (IRDA) publishes the claim settlement ratio of all the life insurance companies for each financial year.
The claim settlement ratio is measured by the number of policies under which the claims have been paid. The ratio has nothing to do with the amount of the claims paid by the insurance company.
However, if a claim has been made and the company is unable to settle it within the financial year, the claim is considered a pending claim. The insurance company will then carry forward the claim to the next financial year and settle it in that year.
A low claim settlement ratio does not mean that the insurance company is bad. There might be some reasons for a low ratio like most of the company’s claims could have been made in the last days of the financial year. This makes your claims pending and reduces the claim settlement ratio.
For example, if, out of 100 claims, the insurance company settles 95 claims, the CSR would be 95% in a year. If the company CSR ratio is high that means the company serves its customers without any trouble.
Claim Settlement Ratio History of LIC
As per the Insurance Regulatory and Development Authority of India (IRDAI), LIC Claim Settlement Ratio over the last few years is as follows:-
| Financial year | Number of claims | Number of claims settled | LIC Claim Settlement Ratio |
|---|---|---|---|
| 2017-18 | 739,082 | 724,596 | 98.04% |
| 2016-17 | 769,386 | 756,399 | 98.31% |
| 2015-16 | 761,983 | 749,249 | 98.33% |
| 2014-15 | 755,901 | 742,243 | 98.19% |
| 2013-14 | 760,344 | 746,212 | 98.14% |
| 2012-13 | 750,576 | 733,545 | 97.73% |
| 2011-12 | 731,136 | 712,501 | 97.42% |
As you can see in this table, LIC has maintained a ratio of more than 98% in most of its cases which shows that the company honors its claim without fail.
LIC Claim Settlement of LIC (2018-19)
In the year 2018-19, the LIC had settled 8.43 lakh claims on individual policies only, with a total payout of INR 17,365.30 crore. Around 6,372 policies costing INR 539.14 crore were repudiated and about 3,697 claims amounting to INR 25.18 crore got cancelled.
At that time, the claim settlement ratio of LIC is 97.79% as on 31st March 2019 compared to 31st March 2018. The repudiation has come down to 0.43% in the year 2018-19 compared to 0.67% in the previous year.
LIC Corporation Ltd. Individual & Group Death Claim Ratio Under Micro Insurance (2018-19)
| Types of LIC Policies | Total Claim | Paid Claim | Repudiated Claim | Rejected Claim | Unclaimed Claim | Pending Claim |
|---|---|---|---|---|---|---|
| LIC Individual Micro Insurance | 100% | 99.50% | 0.15% | 0.00% | 0.22% | 0.63% |
| LIC Group Micro Insurance | 100% | 99.00% | 0.52% | 0.02% | 0.00% | 0.54% |
LIC Claim Settlement of LIC (2017-18)
In the year 2017-18, the LIC Claim Settlement Ratio was 98.04%. This is the percentage of claims received under 7,39,082 policies, where LIC settled 724,596 policies and maintained a high ratio. The company has rejected 0.67% of claims while 0.08% of the claims were pending at the end of the particular financial year. 1.21% of LIC claims were unclaimed by the policyholders. So, out of the settled claims, here’s the percentage of LIC claim settlements-
| Month | Claim Settlement Percentage |
|---|---|
| < 3 months | 45.17% |
| 3 months to < 6 months | 44.64% |
| 6 months to < 12 months | 3.51% |
| > 12 months | 6.68% |
IRDAI Claim Settlement Process for the Insurance Companies
- Provision of auto approval for farmers and auto calculation of claims after the prescribed cut-off dates.
- Reconciliation of data from banks and Insurance Companies
- Auto calculation on National Portal of PMFBY
- Provision of penalties/Incentives for States, ICs and banks which is 12% per annum is paid by the insurance Company to the farmers for delay in settlement of claims beyond the two month prescribed cut-off date.
- State government pays 12% interest for delay in release beyond the 3-month prescribed cut-off date/submission as deemed necessary by the Insurance companies.
- Claims settlement made without waiting for the final subsidy
- Timely disbursement of the policy claim to the farmers in their bank account via DBT or electronic transfer.