Site Content

Life is uncertain and unpredictable. One can only have a proactive measure in place to deal with unpleasant situations. Hence, the concept of ‘insurance’ was introduced with a motive to mitigate the risk and to provide protection. Insurance is the primary way of managing life risk. There are various types of insurance policies available today to protect your loved ones and the things you love. In a life insurance policy, Insurance indemnifies to pay the insured person’s family a certain sum of money in the event of insured’s demise. When it comes to choosing the right insurance plan, you are spoilt with choices as there are various insurance players in the market offering plenty of unique plans.

In India, there are 24 life insurance companies operating which have been approved and recognised by IRDAI (Insurance Regulatory and Development Authority in India), which is a regulatory body for insurance and reinsurance industries.

Insurance is an essential cost that one needs to make in order to secure the future of his/her family. Even the financial advisers suggest you to avail insurance before you start with your financial planning. Insurance is an important necessity for various reasons. Following are some of the reasons:

• Insurance provides you with financial security and safety net:If something unforeseen happens to the bread earner of the family, the financial situation of the family may come to a standstill. Insurance compensation can become a source of income for the family and stabilise the finances. With insurance, your family is financially secure even when you are not around.
• Insurance safeguards you and your family’s future goals:The sudden demise of a family’s breadwinner can have the worst repercussions on the family’s financial stability. With insurance, your family can achieve financial stability even when you are not around. Also, their future financial goals will stay intact.
• Insurance encourages savings:There are various products offered by the life insurance companies that not only provide life cover but also provide a provision for wealth creation to achieve future goals. The requirement of periodic investment into such products encourage savings. For example, endowment plans, money back plans, unit-linked investment plans etc.
• Insurance is an effective risk management tool:The insurance covers uncertainties such as the risk of death, risk of getting hit, falling sick and many more. Insurance is all about managing these risks effectively. Every insurance policy provides coverage against insured risk.
• Insurance provides peace of mind:As insurance manages risk effectively, you can only make regular payments towards insurance and stay tension-free. Peace of mind is what you get by insuring.

1. Life Insurance Corporation of IndiaLife Insurance Corporation of India popularly known as LIC is the largest life insurance company in India owned by the Government of India. LIC, one of the top 10 insurance companies in India, came into existence in the year 1956. LIC makes insurance accessible for every person in any corner of the country with 2048 branch offices, 113 divisional offices, 8 zonal offices and 1381 satellite offices. Currently, LIC’s total asset under management is INR 3,111,847 crores (USD 450 billion). LIC being the dominant insurance player has a huge customer base of over 29 crores policyholders. LIC is a trusted insurance brand that offers great convenience to its customers through its excellent customer services on the digital platform and also through branch offices and various other tie-ups. LIC offers numerous life insurance products that can meet the unique needs of a variety of customer segments. For all the milestones it has achieved, LIC has been consistently recognised and awards. Following are some of the awards received by LIC:
   
   • LIC has been consistently winning the Reader’s Digest Trusted Brand Award
   • According to the Brand Trust Report, LIC has been consistently voted as ‘India’s Most Trusted Brand’ in BFSI category
   • LIC has won ‘Best Life Insurance Company of the Year’ and ‘Most Preferred Life Insurance Company of the Year’ award

LIC was formed in the year 1956 when the Life Insurance Corporation Act was passed to nationalise life insurance business in India. From 1956 to the year 2000 LIC was the sole life insurance provider in India enjoying monopoly position. Though other private insurance companies entered the insurance segment from 2000, LIC retained its leading market position. Even today, LIC has the largest market share among other life insurance companies and enjoys the trust of more than 250 million customers.

LIC offers a range of life insurance products like term insurance, endowment insurance, money back plans, child plans, unit-linked plans, etc. Even health insurance plans are offered by the company which help you meet the rising medical costs of common ailments. All the plans offered by the company have very good coverage benefits and the premiums are also low. Even in the case of claims, LIC believes in settling its customers’ claims quickly and efficiently. This is the reason why the company has been consistently enjoying a high Claim Settlement Ratio. Do you know what the ratio means?

What is Claim Settlement Ratio?

Claim Settlement Ratio (CSR) is the percentage of claims which an insurance company settles against the total number of claims made on it in one financial year. For instance, if, out of 100 claims in a financial year, the insurance company settles 95 claims, the CSR would be 95%. If the ratio is high it shows that the company settles the maximum of its claims and it is a good indicator.

LIC Claim Settlement Ratio history

As stated earlier, LIC has maintained a good CSR over the years and this is one reason why customers trust LIC. Here are LIC Claim Settlement Ratio over the last few years –

 LIC maintained a ratio of more than 98% in most of the financial years leading the claim settlement race among other insurers. This shows that the company honours its claims without fail. 

Analysis of LIC Claim Settlement Ratio of 2017-18

In the last financial year of 2017-18, LIC Claim Settlement Ratio was quite high at 98.04%. Out of the claims received under 739,082 policies, LIC settled claims under 724,596 policies thus having such a high ratio. The company rejected 0.67% of its claims while 0.08% of the claims were still pending when the financial year ended. 1.21% of the claims were unclaimed by the policyholders. Out of the claims settled during 2017-18, here’s the claim turn-around-time followed by LIC –

• Claims settled in less than 3 months – 45.17%
• Claims settled in 3 months to less than 6 months – 44.64%
• Claims settled in 6 months to less than 12 months – 3.51%
• Claims settled in more than 12 months – 6.68%

LIC has been operating since the last 60 years and more and has built up a good claim settlement department which helps the company settle most of its claims. This high claim settlement record also garners trust among policyholders who favour LIC for their insurance needs. So, if you are considering buying a life insurance policy, you can trust LIC and choose a suitable plan for your coverage needs.

Frequently Asked Questions

1. Does claim settlement ratio measure the amount paid in claims?
   No, the claim settlement ratio is used to measure the number of policies under which the claims have been paid. The ratio has nothing to do with the amount of claim paid by the insurance company.
2. What is the meaning of pending claims?
   The claim settlement ratio is calculated by considering the number of claims settled by the insurance company in one financial year. If, however, a claim has been made on the insurance company and the company is unable to settle it within the completion of the financial year, the claim which has been made would be considered a pending claim. The insurance company would carry forward the claim to the next financial year and settle it in that year.
3. If an insurance company has a low claim settlement ratio does it mean that the company is bad?
   No, a low claim settlement ratio does not necessarily mean that the insurance company is bad. There might be some reasons for a low ratio. For instance, most of the company’s claims could have been made in the last days of the financial year which the company could not settle within that year itself. This would make such claims pending and reduce the claim settlement ratio.
4. Who publishes the claim settlement ratio?
   The Insurance Regulatory and Development Authority of India publishes the claim settlement ratio of all life insurance companies for each financial year.

1. What is the claim settlement ratio?Claim settlement ratio in insurance is a total number of death claims approved by an insurance company out of the total number of death claims received by an insurance company for the financial year. The claim settlement ratio denotes the company’s ability to pay or compensate.
2. What is life insurance?Life insurance is a legal agreement between two parties insured (policyholder) and the insurer (insurance company), wherein insurer indemnifies to pay a certain sum of money to the designated nominee in the event of the demise of the policyholder (insured) in return of premium paid by the insured.
3. How does life insurance work?Life insurance covers the risk of death. In case the policyholder dies during the policy term, compensation, as agreed in the life insurance agreement, will be paid to the designated nominee of the policyholder.
4. What are the tax benefits offered under life insurance plans?Premium paid towards life insurance investment qualifies for tax deduction under Section 80C of the Income Tax Act, 1961. The benefits paid out in a Lump Sum are exempt from income tax under Section 10 (10D) of the Income Tax Act, 1961.