Mumbai : The Insurance Regulatory and Development Authority (IRDA) has said the Life Insurance Corporation of India has performed better in terms of claim settlement ratios as compared to private life insurance companies.
“The claim settlement ratio of LIC was better than that of the private life insurers. Settlement ratio of LIC increased to 97.03 percent during the year 2010-11 when compared to 96.54 percent during the previous year”, IRDA said in its annual report.
The percentage of claims rejected by LIC stood at 0.01 percent. The ratio of repudiations to total reported claims declined from 1.21 percent in the previous year to 1.00 percent in 2010-11. Compared to LIC, private insurers rejected a large number of claims. Their ratio of repudiations increased to 8.90 percent in 2010-11 from 7.61 percent in 2009-10. Overall, the industry’s settlement ratio has improved slightly at 95.58 percent in 2010-11 from 95.24 percent in 2009-10 but the repudiation ratio has also gone up to 2.04 percent in 2010-11 from 1.93 percent in 2009-10.
Private insurers have improved their performance but their settlement ratio is much lower than LIC. For private companies, the improved claim settlement ratio stands at 86.04 percent during the financial year 2010-11 when compared to 84.87 percent during the previous year.
When it came to pending claims, LIC’s numbers are again better. As compared to private companies which had 5.36 percent of total claims yet to be settled at the end of the year, LIC had only 0.33pc claims pending. While over 75 percent of LIC’s claims were outstanding for less than three months, in the case of private companies 54 percent of claims were pending between three to six months.
In 2010-11, the life insurance companies have settled 8.13 lakh claims on individual policies, with a total payout of Rs 7,595 crore. The number of claims repudiated was 17,350 for an amount of Rs 336 crore. The number of claims pending at the year-end was 16,415 and the amount involved was Rs 306 crore.
During 2010-11, private companies have been more successful than Life Insurance Corporation in managing operational costs. Operating expenses, as a per cent of gross premium, increased for LIC from 6.58pc in 2009-10 to 8.34pc in 2010-11. However, the same declined marginally for private insurers from 20.97pc in 2009-10 to 18.11pc in 2010-11.
For the industry as a whole, the operating expenses ratio increased slightly from 10.88 percent in 2009-10 to 11.30 percent in 2010-11, the report added.