When purchasing insurance, individuals trust that their insurance companies will provide financial support in times of need. However, a recent report by the Insurance Brokers Association of India (IBAI) revealed that the claim-to-settlement ratio in India dropped from 87% in FY22 to 86% in FY23. This means that out of all the claims filed, 86% were successfully settled, while 14% were rejected. The report compiled data from insurance providers to help individuals make informed decisions when buying insurance policies.
The claim-to-settlement ratio is a crucial metric that measures the number of claims settled compared to the total number of claims filed. The insurance regulator, IRDAI, requires insurance companies to publish their settlement and rejection statistics on their websites. The report found that the claims repudiation rate increased to 6% for general insurance, which encompasses health, fire, motor, and marine cargo coverage.
Some insurance companies performed better than others in terms of claim settlement ratios. Private insurance companies such as HDFC Ergo, Future Generali, Aditya Birla Health, and Shriram had fewer claims rejections. New India Assurance, a public sector insurer, had the lowest claims rejection ratio at 0.2%. In the health insurance sector, New India Assurance had a claim settlement ratio of 95%, while Aditya Birla Health achieved a claim settlement ratio of 95% among independent health insurers.
The report also highlighted that insurance coverage in India is limited, with a penetration rate of 30% compared to developed nations like the US, where it exceeds 90%. The high tax on insurance premiums, at 18%, is a significant factor contributing to limited coverage. To avoid last-minute claim rejections, policyholders must be transparent about their medical history and provide necessary documents.
The IBAI report provides valuable insights for individuals buying insurance policies. It emphasizes the importance of choosing an insurance company with a good claim settlement ratio and being transparent about medical history to avoid claim rejections. By making informed decisions, individuals can ensure that their insurance policies provide the necessary financial support in times of need. Overall, the report highlights the need for increased insurance penetration and awareness in India, as well as the importance of transparency and careful planning when purchasing insurance policies.