You plan to buy a life insurance policy and are scouting around for the best available product that suits your requirement and your pocket. You have checked the premium rates and the features of the policies on offer. But did you care to check the claim settlement ratio of the company?
What is claim settlement ratio and what does it indicate? Claim settlement ratio is the amount of claims paid by the company against the total claims received from nominees of policyholders. A high claims settlement indicates that the company has been paying out claims without raising hurdles in the way of nominees when they need the money most.
But should claims settlement ratio be one of the major determinants in deciding which company you should buy your policy from? Insurance experts feel that this indicator should be taken into consideration but should not bear heavily on the purchase decision.
“One should always look into the claim settlement ratio of a company before buying insurance from it but getting your claim is never a guarantee if there are gaps in the process, especially from the consumer end,” says Naval Goel, founder and CEO, PolicyX.com.
Mahavir Chopra, Director, Health, Life and Strategic Initiatives, Coverfox.com, agrees. “Claim settlement ratio gives a fair idea of the insurance companies track-record with respect to claim settlements. It is important that one does not get lured by cheap premiums and ignore this important data point.”
As per the Insurance Regulatory and Development Authority of India (IRDAI) data of 2014-15, among Indian insurers, the Life Insurance Corporation (LIC) has the highest claims of over 98 per cent, followed by a host of private insurance companies which have healthy settlement ratios of over 90 per cent, with a couple of companies having settlement ratios of above 95 per cent