Assume a scenario where due to an unfortunate incident, your spouse, who has been the sole bread-winner for the family, expires and the insurance company refuses to pay you any claim on certain technical grounds. Scary as this may sound, but it’s not very uncommon to come across such situations. The claim which you were a rightful receiver of got rejected but what happened? Why did their insurance company reject the claim?
The life insurance company repudiated the claim outright. Their argument was that they had to be informed within a few days of the death of the policy holder. This was the condition and was part of the terms and conditions.
This life insurance company might be having a great claim ratio of over 90-95 per cent.This ratio is a key indicator of how an insurer treats such cases. One should always look into the claim settlement ratio of a company before buying insurance from it but it is never a guarantee if there are gaps in the process, especially from the consumer end.
Knowing the process
Every person who is concerned with a life insurance policy as a holder or nominee must know about the claim settlement process laid out by their insurer. It is good to be practical and not shy away from the essential processes which are central in meeting the objectives set out by the policyholder towards financial security of his or her dependents.
First and foremost, the concerned insurance company must be informed about the demise of policy holder within a week of death. It is a very simple step which many people ignore.
Once the company receives the intimation of policy holder’s death, it asks for the below set of documents:
Claim form, duly filled with all necessary details
Death Certificate issued by concerned Civic Authority
Life Insurance Policy Document
Photo ID card of nominee
If the policy is taken through an agent, then the agent must be able to assist in completing this process of submitting the above mentioned documents. One should always keep the photo copies of these documents handy.
Apart from the above set of documents, a nominee may also be asked for additional supporting documents, in order to settle the claim in proper manner.
In addition, one may also be required to submit post-mortem report, medical attendant certificate, hospital certificate and employer’s certificate, depending upon the reasons and circumstances under which the policy holder lost his or her life.
Claim settlement ratios: An overview
The Insurance Regulatory and Development Authority in India (IRDAI) maintain this data with it centrally for all the insurance companies operating in India. All companies have to mandatorily submit this data to the Regulator, without any exception. It is a public data and anyone can refer to it.
Going by the said data, Life Insurance Corporation (LIC) of India remains the most impressive company in terms of its claim settlement ratio. It boasts of >98 per cent per cent ratio, which is amazing. The company is a giant from the public sector and is the largest insurance company in India. It’s market share if more than half of the total market. After all, it has a first mover advantage in this space, with monopoly of several decades.
Other private sector companies are also putting their efforts to maintain good ratios. However, many times, it is seen that some companies just try to find reasons to reject claims and get away from the liability of settling claims. Ultimately, this hurts their brand reputation in the market.
But there are many companies which are offering great claim ratios. Companies like Max Life, Birla Sun Life are two of the top performing companies in terms of claim settlement ratio as per the IRDA figures for FY 2014-15. They both have a settlement ratio above 95%. The scenario is improving fast and most companies are striving to respect claims raised by their customers. The IRDAI is also quite serious on this front and is overseeing companies on this parameter with great caution.
The author is founder and CEO, PolicyX.com.