In accordance with the data by Insurance Regulatory and Development Authority of India’s (IRDAI) annual report 2019-20, the claim settlement ratio of Life Insurance Corp. of India (LIC) declined in FY20 to 96.6% from 97.7% in FY19. On the other hand, Private Insurers has increased their settlement ratio to 97.18% for FY20 from 96.6% in FY19. LIC was ranked 17th among the 24 life insurers.
- Among, private sector life insurer Max Life had the highest claim settlement ratio for the industry at 99.2% followed by HDFC Life and TATA AIA – with a settlement ratio above 99%.
- On the front of overall life insurance sector 8.46 lakh claims were paid on individual policies, with a total payout of Rs 18042 crore in the FY20.
It should be noted that the annual report of IRDAI is prepared in accordance with the provisions of section 20 of the IRDAI Act, 1999.
What is claim settlement ratio?
It is a percentage of life insurance claims an insurer has settled during a financial year against the number of claims it receives in the period. The higher ratio represents better performance of insurer in addressing the claims.
–For FY20 the life insurance industry repudiated 8,927 claims worth Rs 555 crore and rejected 2,262 for an amount of Rs 20 crore.
–Edelweiss Tokio Life and Sahara Life had among the worst settlement ratios at 83.4% and 89.4% respectively
–In the group life business, out of 10.26 lakhs total number of the group claims, life insurance industry paid a total of 9.98 lakh claims constituting 97.27%.
Growth Projection between Public & Private Insurers:
Public sector insurers reported a growth of 6.71 per cent in 2019-20, over the previous year’s growth rate of 1.28 per cent. The private general insurers registered a growth rate of 11.63 per cent, as against 24.25 per cent during the previous year.
The standalone health insurers registered a growth rate of 27.47 per cent in FY 20 as against 36.56 per cent in FY19 and the Specialised insurers registered a growth rate of 28.08 per cent in FY20 as against a negative growth of 10.79 per cent recorded during the FY19.
Based on Insurance Sector:
Motor business continued to be the largest general insurance segment with a share of 36.50 per cent in 2019-20 (38.08 per cent in 2018-19), followed by the health segment with 30.10 per cent market share (30 per cent in 2018-19).
- The motor segment reported a growth rate of 6.86 per cent in 2019-20 (8.91 per cent in 2018-19).
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Recent Related News:
i.On November 11, 2020 Insurance Regulatory and Development Authority of India(IRDAI) gave its final approval for the merger of HDFC ERGO Health Insurance (formerly Apollo Munich Health Insurance Co Ltd) with HDFC ERGO General Insurance Co Ltd (HDFC ERGO).
ii.On September 24, 2020, IRDAI has identified Life Insurance Corporation of India(LIC), General Insurance Corporation of India(GIC) and The New India Assurance Co. Ltd.(New India Assurance) as Domestic Systemically Important Insurers (D-SIIs) for 2020-21.
About Insurance Regulatory and Development Authority of India (IRDAI):
Chairman – Subhash Chandra Khuntia
Headquarters – Hyderabad, Telangana