LIC scores best in claims settlement during 2010-11
Source: Business Standard
Source: Business Standard
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At a time when customer service and satisfaction is becoming the key to success for life insurance companies, the claim repudiation ratio (in case of death claims) has improved over the last financial year. According to data from company sources, the Life Insurance Corporation of India (LIC) still remains the benchmark when it comes to settling death claims. However, major private players are also fast catching up.
A repudation ratio is a measure of claims rejected.
During 2010-11, LIC improved its repudiation ratio for death claims to 1.09 per cent from 1.21 per cent in the previous year. In the same period, the public sector insurance behemoth settled 97.5 per cent of death claims, whereas claims pending stood at 1.47 per cent.
“Overall, we have settled 99.6 per cent of the total claims in the last financial year. And 95 per cent of the death claims were settled within 15 days of intimation,” said a senior LIC official.
In total, during the 2010-11, LIC has settled around 18.3 million claims amounting to Rs 53,000 crore, which includes survival benefits, maturity and death claims. Of this, Rs 6,000 crore accounted for 721,000 death claims.
Among theprivate players, ICICI Prudential Life was the best performer in terms of claims repudiation ratio, whereas HDFC Life’s claims settlement ratio was the highest, respectively.
ICICI Prudential’s claims repudiation ratio stood at 2.8 per cent, whereas for HDFC Life it was at 3.97 per cent. During the same time, HDFC Life settled 96.03 per cent of the total death claims, while ICICI Prudential settled 94.4 per cent of claims. Claims pending for HDFC Life and ICICI Prudential stood at 0.61 per cent and 2.6 per cent, respectively.
Among the established players, the repudiation ratio for SBI Life and Max New York Life worsened to 16.74 and 14.85, respectively.
For the smaller or relatively new private life insurance players, the ratio still remains on the higher side. For instance, India First Life, which began operation in 2009, had a repudiation ratio at 9.4 per cent, whereas for IDBI Federal Life which started in 2007, it was 21 per cent.
“The repudiation ratio improves over a period of time as in a death within two years (early death claims) of the issue of the policy requires investigation. So, for the newer companies the proportion of early death claims always remains high. Hence, the ratio is becomes skewed,” said an official at a private life insurance company.
Settlement of any insurance claim involves interpretation of a lot of technical conditions generally used by insurers to reject the claims. However, non-early death claims (claims after two years of the issue of the policy) do not mandate any investigation. Hence, the settlement procedure is faster and easier.