Term insurance policy is a safety net that assures the policyholder of their family’s financial security in their absence. Precisely because of this, applicants look for an insurer who can provide them with the most reliable cover. On the other hand, insurers have a fiduciary responsibility to provide funds to the insured’s family to cover the risk. That is why the insurer’s ability to provide guaranteed insurance claim benefits is a crucial factor that drives the buyer’s confidence in the insurance plan.
While purchasing term insurance; therefore, buyers must make sure that at the time of making a claim, their family shouldn’t have to face denial. Here, the insurer’s ‘Claim Settlement Ratio’ or the number of claims settled by them on a year-on-year basis, serves as a ‘make-or-break’ deal for the buyers.
Claim Settlement Ratio
The Claim settlement ratio, primarily, refers to the number of claims accepted and settled by an insurer in comparison to the total requests received in a period. Therefore, it serves as an essential objective metric to determine how reliable is the insurance provider.
Among private sector insurers, Max Life Insurance has continued to deliver on its promise of settling maximum claims every year. This is evident from the fact that its average paid percentage ratio for three years equals to 98.27%, which is the highest among all other players.
Rankings Over the Years
To be sure of an insurer’s credibility in settling claims, taking a single year’s ratio or percentage into consideration may not reflect their performance fully. However, taking an average of consecutive years better establishes whether the insurer is a reliable option to depend on or not. Max Life Insurance, by achieving the highest average claim paid percentage among all insurers have made it clear that policyholders can feel more assured of having their claim settled at the time when their family needs it the most.
Insurance Company | FY’ 2016-17 | FY’ 2017-18 | FY’ 2018-19* | Average for 3 years |
Max Life | 97.81% | 98.26% | 98.74% | 98.27% |
LIC | 98.31% | 98.04% | 98.27% | 98.21% |
HDFC Life | 97.62% | 97.80% | 99.03% | 98.15% |
ICICI Pru | 96.68% | 97.88% | 98.60% | 97.72% |
Tata AIA | 96.01% | 98.00% | 99.07% | 97.69% |
SBI Life | 96.69% | 96.76% | 96.80% | 96.75% |
Source - IRDAI Annual Report
*Source: Public Disclosures of Life Insurance Companies
In FY2016-17, Max Life was a number two position in a claim paid percentage ranking. Then in the following year, it climbed up to number one position, showing how it was making consistent efforts to benefit more policyholders. Therefore, just as it was anticipated, it has emerged as a leader with the highest overall paid percentage value than all other players. This throws light on how the reputable insurer has been able to secure a more significant number of families in times of crisis as compared to other private insurers.
An Important Performance Metric
It is because of this why many financial advisors also suggest that at the time of purchasing the policy, more importance should be given to a critical metric like claim settlement ratio over premium rates and other benefits. Taking this approach will ensure that policyholders do not have to face disappointment at the time of making a claim.
Moreover, Max Life’s Insta claim settlement even promises that the claim settlement shall be done within one day itself. Even if the claim gets delayed due to some reason, then the family will still be paid up to three years of paid premiums for the cover. However, the insurer assures that in any case, the claim would be settled within ten working days and if not, then it shall pay interest on the proceeds.
So, every policyholder should give due attention to checking the prospective insurer’s claim paid percentage before purchasing their insurance policy.