Irdai notifies insurers’ death claims settlement ratio for fiscal year 21: check details


The main purpose of purchasing a life insurance plan is to provide financial security for family members in the event of the death of the breadwinner. A life insurance plan is calculated based on future goals, inflation, and other daily requirements. Life insurance helps meet commitments by having sufficient funds available despite any disaster.

The Indian Insurance Regulatory and Development Authority has notified the death claims settlement ratio of life insurers for the year 2020-2021.

What is a claims settlement ratio?

The insured’s family should get the sum insured as this can be a decisive situation for them as the family will depend on this money in the future.

Naval Goel, Founder and CEO of PolicyX.com, said the claims settlement ratio is historical data that reflects the company’s ability to honor the claim. Based on the history of the insurance company, the insured can predict the future of the claim, whether it will be honored or not. “The higher claims settlement rate illustrates credibility by demonstrating that the insurance company has successfully resolved the majority of claims raised by its customers. And a low claims settlement rate shows the inability of an insurance company because the insurance company has not successfully settled the claims, ”Goel said.

The higher claims settlement ratio is proportional to the higher claims settlement chances as a company.

How is it calculated?

The claims settlement ratio is calculated by dividing the total number of claims settled by the total number of death claims.

Formula – Claims Settlement Ratio (SCR) = (Total number of claims settled in a year / total number of claims in a year) X 100

According to Irdai’s 2020-21 annual report, the LIC claims settlement rate was 98.62% as of March 31, 2021 compared to 96.69% as of March 31, 2020 and the proportion of repudiated / rejected claims has decreased to 1.0% in 2020 -21 against 1.09% the previous year.

Goel said: “The private insurer claims settlement rate was 97.02% in 2020-21 (97.18% in 2019-2020) and the proportion of repudiations fell to 2.0% in 2020-21 against 2.50% the previous year. The life insurance industry settlement ratio increased to 98.39% in 2020-2021 from 96.76% in 2019-20 and the repudiation / rejection ratio decreased to 1.14% from 1.28 % in 2019-20. “

The table below shows the death claims settlement ratio of life insurers for 2020-2021:

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