Life Insurance Claim Settlement Ratio for FY 2020-21

Published: January 13, 2022 at 7:00 am

The life insurance claim settlement ratio for FY 2020-21 is presented below. These were published in the IRDA annual report in Dec 2021. The reader must appreciate that the claim settlement ratio (CSR) is not a life insurance claim acceptance probability!

Even if you make the mistake of assuming it represents a probability, a high  CSR means very little because most companies have CSR = 95% (22 out of 24), and there is little to distinguish among them based on just this number.

Life Insurance Claim Settlement Ratio for FY 2020-21

Claim settlement ratio = the number of claims paid divided by the total number of death claims received.

Here the total no of claims = no of claims received in FY 2020-21 plus the no of claims pending at the start of the financial year.

Total no of claimsClaims paidClaims paid
SBI Life342193185593.09%
Max Life200521992299.35%
ICICI Prudential148291451897.90%
Bajaj Allianz143331411598.48%
Reliance Nippon9416927498.49%
Aditya Birla Sun Life6474634798.04%
PNB Met Life5315521898.17%
Exide Life5052497898.54%
Tata AIA4648455698.02%
Kotak Mahindra4402433698.50%
India First2981288696.81%
Canara HSBC OBC1899184497.10%
Bharti Axa1893187599.05%
Ageas Federal1805171695.07%
Star Union1635156995.96%
Future Generali1226116394.86%
Pramerica Life64763898.61%
Edelweiss Tokio50248797.01%

Source: IRDA Annual report for FY 2020-21 page 161

Get free money management solutions delivered to your mailbox! Subscribe to get posts via email!

    🔥Enjoy massive discounts on our robo-advisory tool & courses! 🔥

    A high claim settlement ratio with a low number of claims is unreliable. So the above table is sorted in descending order of total claims.

    The only reason a buyer is misguided to look at CSR data is that they do not want to pay a high premium to LIC and look for a “reliable private player”. We recommend looking at the total number of claims rather than just the CSR. Only six insurers have more than 10,000 claims. The market share of the others is therefore quite small.

    InsurerTotal no of claims  FY 2020-21Total no of claims  FY 2019-20
    SBI Life3421922490
    Max Life2005215463
    ICICI Prudential1482911460
    Bajaj Allianz1433312127

    The gulf between LIC and other insurers is quite evident here.  The CSR data for the last two financial years for the “top six” is given below.

    InsurerClaim Settlement Ratio  FY 2020-21Claim Settlement Ratio  FY 2019-20
    SBI Life93.09%94.52%
    Max Life99.35%99.22%
    ICICI Prudential97.90%97.84%
    Bajaj Allianz98.48%98.02%

    The Increase in claims from FY 2019-20 to 2020-21 for the top six and the corresponding change in CSR  is shown below.

    Change in CSR = CSR for FY 2020-21 minus CSR for FY 2019-20

    Increase in no of claims from FY 2019-20 to 2020-21Change in CSR
    SBI Life52.15%-1.43%
    Max Life29.68%0.13%
    ICICI Prudential29.40%0.06%
    Bajaj Allianz18.19%0.46%

    There is not much change in CSR overall. Some numbers do stand out. The no of claims of LIC increased by 188060. The total number of claims for the other five in FY 2020-21 is only 100409! LIC has still increased its CSR by an impressive 1.93% – a good recovery considering recent data: Has LIC’s death claim settlement capacity reduced over the years?

    Some people argue, “but most of those policies are small endowment policies”. This is undoubtedly true, but a behemoth of that size can easily handle the typical term insurance claim settlements of Rs. one crore. For those who want to stop analysing, LIC is the way to go as long as they don’t mind the higher premium. Disclosure: My Term insurance is from LIC.

    Will things change after LIC goes public? It may; it may not. It will take years before the data reveals something conclusive. You can’t wait until then!

    For those who to buy term insurance from a private player,  then pick one from the other five:

    • SBI Life
    • Max Life
    • HDFC
    • ICICI Prudential
    • Bajaj Allianz

    Read the terms and conditions of the policy and “just pick one”. Don’t grow old analysing these policies too much. At the end of the day, it is a leap of faith (aka inky pinky ponky), so it is all about what makes you sleep at night better. You have already grown old by a few minutes reading this article. Do not put off your term life insurance purchase any longer!

    Do share this article with your friends using the buttons below.

    🔥Enjoy massive discounts on our courses and robo-advisory tool! 🔥
    Use our Robo-advisory Excel Tool for a start-to-finish financial plan! More than 1000 investors and advisors use this!
    New Tool! => Track your mutual funds and stocks investments with this Google Sheet!
    • Follow us on Google News.
    • Do you have a comment about the above article? Reach out to us on Twitter: @freefincal or @pattufreefincal
    • Join our YouTube Community and explore more than 1000 videos!
    • Have a question? Subscribe to our newsletter with this form.
    • Hit 'reply' to any email from us! We do not offer personalized investment advice. We can write a detailed article without mentioning your name if you have a generic question.

    Get free money management solutions delivered to your mailbox! Subscribe to get posts via email!

      Explore the site! Search among our 2000+ articles for information and insight!

      About The Author

      Pattabiraman editor freefincalDr M. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. He has over nine years of experience publishing news analysis, research and financial product development. Connect with him via Twitter or Linkedin, or YouTube. Pattabiraman has co-authored three print books: (1) You can be rich too with goal-based investing (CNBC TV18) for DIY investors. (2) Gamechanger for young earners. (3) Chinchu Gets a Superpower! for kids. He has also written seven other free e-books on various money management topics. He is a patron and co-founder of “Fee-only India,” an organisation promoting unbiased, commission-free investment advice.
      Our flagship course! Learn to manage your portfolio like a pro to achieve your goals regardless of market conditions! More than 3000 investors and advisors are part of our exclusive community! Get clarity on how to plan for your goals and achieve the necessary corpus no matter what the market condition is!! Watch the first lecture for free!  One-time payment! No recurring fees! Life-long access to videos! Reduce fear, uncertainty and doubt while investing! Learn how to plan for your goals before and after retirement with confidence.
      Our new course!  Increase your income by getting people to pay for your skills! More than 700 salaried employees, entrepreneurs and financial advisors are part of our exclusive community! Learn how to get people to pay for your skills! Whether you are a professional or small business owner who wants more clients via online visibility or a salaried person wanting a side income or passive income, we will show you how to achieve this by showcasing your skills and building a community that trusts you and pays you! (watch 1st lecture for free). One-time payment! No recurring fees! Life-long access to videos!   
      Our new book for kids: “Chinchu gets a superpower!” is now available!
      Both boy and girl version covers of Chinchu gets a superpower
      Both boy and girl version covers of Chinchu gets a superpower.
      Most investor problems can be traced to a lack of informed decision-making. We have all made bad decisions and money mistakes when we started earning and spent years undoing these mistakes. Why should our children go through the same pain? What is this book about? As parents, what would it be if we had to groom one ability in our children that is key not only to money management and investing but to any aspect of life? My answer: Sound Decision Making. So in this book, we meet Chinchu, who is about to turn 10. What he wants for his birthday and how his parents plan for it and teach him several key ideas of decision making and money management is the narrative. What readers say!
      Feedback from a young reader after reading Chinchu gets a Superpower (small version)
      Feedback from a young reader after reading Chinchu gets a Superpower!
      Must-read book even for adults! This is something that every parent should teach their kids right from their young age. The importance of money management and decision making based on their wants and needs. Very nicely written in simple terms. - Arun.
      Buy the book: Chinchu gets a superpower for your child!
      How to profit from content writing: Our new ebook for those interested in getting side income via content writing. It is available at a 50% discount for Rs. 500 only!
      Want to check if the market is overvalued or undervalued? Use our market valuation tool (it will work with any index!), or you buy the new Tactical Buy/Sell timing tool!
      We publish monthly mutual fund screeners and momentum, low volatility stock screeners.
      About freefincal & its content policy Freefincal is a News Media Organization dedicated to providing original analysis, reports, reviews and insights on mutual funds, stocks, investing, retirement and personal finance developments. We do so without conflict of interest and bias. Follow us on Google News. Freefincal serves more than three million readers a year (5 million page views) with articles based only on factual information and detailed analysis by its authors. All statements made will be verified from credible and knowledgeable sources before publication. Freefincal does not publish any paid articles, promotions, PR, satire or opinions without data. All opinions presented will only be inferences backed by verifiable, reproducible evidence/data. Contact information: letters {at} freefincal {dot} com (sponsored posts or paid collaborations will not be entertained)
      Connect with us on social media
      Our publications

      You Can Be Rich Too with Goal-Based Investing

      You can be rich too with goal based investingPublished by CNBC TV18, this book is meant to help you ask the right questions and seek the correct answers, and since it comes with nine online calculators, you can also create custom solutions for your lifestyle! Get it now.
      Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You Want Gamechanger: Forget Start-ups, Join Corporate and Still Live the Rich Life you wantThis book is meant for young earners to get their basics right from day one! It will also help you travel to exotic places at a low cost! Get it or gift it to a young earner.

      Your Ultimate Guide to Travel

      Travel-Training-Kit-Cover-new This is an in-depth dive analysis into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, and how travelling slowly is better financially and psychologically with links to the web pages and hand-holding at every step. Get the pdf for Rs 300 (instant download)