Why should claim settlement ratio of insurance companies score over other parameters?

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Why is claim settlement ratio of insurance companies important?
The main purpose for which the insurance and more specifically term insurance is purchased is many a times overlooked ahead of several other considerations such as the extent of tax deduction, return in case of other non term-cover plans. But the primary if not the only purpose for which insurance is bought i.e. the provision of financial security to the dependents in case some unfortunate event happens should be given due attention. To know about tips to get your insurance claims processed faster. Click here.

For this one must ensure claim settlement record of the insurer company from which you ought to purchase the policy. In a recent study, IRDA reported highest claim settlement by Life Insurance Corporation of India (LIC). Of the several new age private insurers, only few have shown the claim-settlement ratio of over 90%. The higher premiums charged by the LIC for insurance plans in comparison to other insurers can be justified with the company providing better claim settlement.

As suggested, after determining the record pertaining to claim settlement of different insurers in the market, customer should zero in on the policy from an insurer who has a record of above 95% in respect of claim-settlement considering other factors at the same time such as investment objective, features, benefit and premium among others.

Cases under which insurer cannot refuse to settle Insurance Claims

Generally, insurance companies reject claims on grounds of incomplete or wrong disclosures in the proposal forms. The main reason for such an issue is the completion and submission of insurance proposal by the insurance agent who mainly attempt to serve their own interest by filling up the form and pay little or not heed to provide the correct details. For such an issue, agents cannot be only blamed as the insurance policy buyer should ideally complete the form on his own as it would then bring other integral facts regarding the policy to his notice.

As per IRDA provisions, under circumstances when the insurance policy is running and is in force for over two years, insurers cannot refuse to process the claim request on grounds of non-disclosure of certain facts and figures by the insured person.

Platform to confirm the claim-settlement record or status of an insurer

As an individual on the look out for an insurance policy, it is your prime duty to ensure that the product serves well the purpose for which it is being purchased. For ascertaining this you should check the claim settlement ratio with either the insurance agent who if not truly can give a faint picture of the claim settlement record or prospects of the company. The other source that can be looked upon for confirming the ratio of claims honoured by different insurers is the IRDA site that releases industry data on a regular basis concerning different parameters of importance in the insurance vertical.

Early process of insurance claims should also be the criteria other than the good claim-settlement ratio of the insurance provider. For this, potential customers should also study the time in general in which the insurance company processes the claim request placed by the nominee of the policy.


Story first published: Saturday, January 18, 2014, 11:32 [IST]
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