A few days ago I had posted a chart showing how the claims settlement ratio looks like in life insurance in India.
LiC was at the top with about 97% and some of the newer firms were at the bottom at 50%. Of course it was a play on numbers and for the common man really difficult to understand. If I were to legislate understanding insurance before buying, I would suggest a PhD in statistics, or a degree in acturial science!
The numbers favor LiC so overwhelmingly because claims seem to include maturity claims too. In the repudiation of claims PERHAPS the maturity claims have not been included in the numerator and the denominator. However I do not know for sure. 2 large life insurance companies contradicted themselves when I asked them what goes to the numerator and what goes to the denominator – and I was talking to SENIOR people reporting to the CEO.
Life insurance companies have a very high rate of rejection in the ‘early claims’ – so if there is a claim made within 2 years of taking the policy, there is a far greater chance of it being rejected. Unfortunately I could not find the break up of ‘early claims’ and ‘normal claims’. Now think of companies that are 4-5 years old – fairly obvious they are getting ONLY early claims, so numbers being put out without this break up is FRAUD.
Unfortunately IRDA has not defined the ratio’s as a result the numbers are not strictly comparable. The formulae for the ratios are given below
Claims Settled Ratio = ( No of claims settled/Total No of claims registered) * 100
Claims Repudiated = ( No of claims repudiated/ Total no of claims registered) * 100
Claims Pending = ( No of Claims pending/ Total no of claims registered) * 100
The total of all the three ratios is 100%
Including pension claims and maturity claims in the numerator and denominator will change the ratios dramatically…correct?
Why cannot the regulator publish the absolute numbers along with the ratios? Hmmmm back to the original statement – ‘the regulator speaks the language of the most powerful player….’
Should also the value not be published? Let us say a small company has paid one claim of Rs. 1 crore and has repudiated 5 claims of Rs. 2 lakhs, the ratio is likely to say 20% as settled! In terms of value, obviously the answer is much, much different.
Just think about it…..numbers do not lie, but liars find a way to lie using numbers!!
Just because you see LiC has the best ratios it does not mean ANYTHING….just a thought though….!!
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