Claim Settlement Ratio – It is the percentage of no.

life insurance claims done(paid) by an

insurance company against the no. of claims during a year.
Claim Settlement Ratio = Total claims settled in a year / Total claims received in a year x 100
For Example – If the death claim settlement ratio of an insurance company is 92%, it means that
the insurance company has settled 92 death insurance claims out of every 100 insurance claims
received during a year. The remaining 8 percent insurance claims are rejected by the insurance
company. This way claim settlement ratio is calculated.

Factors on which claim settlement ratio depends upon -

1. Reporting – Claims are settled on the basis of reporting time of claim received.
2. No. of claims received.
3. Claim raised for coverage should be covered by the insurance policy.
4. Amount of premium obtained during a year.
5. Risk Factors (Fraudulent activities, medical and financial information).
6. Documentation – Only once all the relevant documents duly assessed and approved
only then final settlement is done.

Importance of claim settlement ratio -

1. Claim settlement ratio talks about stability of a company whether it is healthy or
unhealthy.
2. Through this we can ascertain which company is better and more reliable.
3. Company with claim settlement ratio more than 90% can be a reliable or healthy
company.
4. High claim settlement ratio makes person assured that the entire experience of claim
filing to get done will be simple, convenient, and transparent.
5. Gives assurance about quick settlement of claim.
6. High claim settlement ratio reflects insurance companies' commitment towards its
policyholders.
 Life Insurance Companies with their last 5 years Claim Settlement Ratio

Name of
the 2019-20 2018-19 2017-18 2016-17 2015-16
Company
LIC 96.69% 97.79% 98.04% 98.31% 98.33%
Max Life 99.22% 98.74% 98.26% 97.81% 96.95%
HDFC
99.07% 97.15% 97.80% 97.62% 95.02%
Standard
Aegon Life
98.01% 96.45% 95.67% 97.11% 95.31%
Insurance
SBI Life 94.52% 95.03% 96.76% 96.69% 93.39%
ICICI
97.84% 98.58% 97.88% 96.68% 96.2%
Prudential
Exide Life 98.15% 97.03% 96.81% 96.4% 89.36%
TATA AIA
99.06% 99.07% 98.00% 96.01% 96.8%
Life
Canara
98.12% 94.04% 95.22% 94.95% 92.99%
HSBC
Birla Sunlife 97.54% 97.15% 96.38% 94.69% 88.45%
Reliance
98.12% 97.71% 95.17% 94.53% 93.82%
Life
Edelweiss
83.44% 95.82% 95.24% 93.29% 85.11%
Tokio
Bharti Axa
97.35% 97.28% 96.85% 92.37% 80.02%
Life
Bajaj Allianz 98.02% 95.01% 92.04% 91.67% 91.3%
 Kotak
96.38% 97.40% 93.72% 91.24% 89.09%
Mahindra
DHFL
98.42% 96.80% 96.62% 90.87% 83.64%
Pramerica
Aviva Life 97.53% 96.06% 94.45% 90.6% 81.97%
IDBI
96.47% 95.79% 91.99% 90.33% 84.79%
Federal Life
Sahara Life 89.45% 90.16% 82.74% 90.21% 90.3%
Future
95.28% 95.16% 93.11% 89.53% 90.26%
Generali
PNB Metlife 97.18% 96.21% 91.12% 87.14% 85.36%
Star Union
96.96% 96.74% 92.26% 84.05% 80.73%
Daichi
India First
96.65% 92.82% 89.83% 82.65% 71.87%
Life
Shriram
91.61% 85.30% 80.23% 63.53% 60.24%
Life

From above all listed companies, I will go for Max Life Insurance Company for life insurance
policy as it showed consistency in its claim settlement ratio over the last 5 years and the
presence is widespread across India. Also, the CSR from the last 5 years is above 95% which
means it is better and more reliable company and last year CSR ratio is 99.22% which means is
less chance of rejection of claim, easy and quick. Online and offline channels which ensures
quick and easy policy buying experience. This company gives us the option of multiple premium
payment modes, including net banking, credit cards, debit cards, and digital wallets and
provides 24*7 customer service. Max Life has a solvency ratio of 207%, more than 1.38 times
the mandatory 150% (1.5 times), which indicates strong and stable financial position.