Review of IRDAI Report 2014-15

Written by Vidya Kumar

February 11, 2016

Area
Life (in USD Billion)
Non-Life (in USD Billion)
Total (in USD Billion)
World
​2654.55
2123.7
4778.25

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* Source – IRDAI Annual Report 2014-15  

Non-Life Insurance
2.9
4.8
​If this has to be visualized in actual figures, here is the data –
Premium Received by Insurance companies in 2014-15
Insurance is an important aspect of financial planning for individuals, families and organizations. 
Here are some figures to give you a true picture of insurance –  

The amount paid as insurance in India and the world has increased slightly –
​Life Insurance
​4.3
1


Total Real Premium Growth Rate in 2014 (% growth rate over 2013)
World Figures (%)
India Figures (%)
India
55.3  
14.59
69.89
Executive Summary – Insurance is very important as it helps to mitigate risk and protects against unfortunate events from a financial aspect. It is important to get insured from the right company. Claim settlement ratio, Incurred Claim Ratio, Grievances Resolved are some figures that help you selecting the right insurer. 

Private Insurance Companies
88.31%
89.40%

* Source – IRDAI Annual Report 2014-15 
People have to be aware of insurance and know the right information on insurance. The Insurance Regulatory and Development Authority of India (IRDAI) holds a series of consumer awareness initiatives to educate the people on insurance and to protect the interests of policyholders. In 2014-15, these include
         – Mandating all insurers to have Board approved Insurance Awareness Policy.
         – Release of handbooks such as “Introduction to Insurance”, “A Handbook on Insurance” and   “CropInsurance” to make people understand                   about insurance the previous year and   continuing them in 2014-15.
 
As a policyholder or a person interested in buying insurance, one would be interested in parameters that help us decide which insurance company to buy a policy from such as claim settlement figures etc.
​ 
LIFE INSURANCE

Death Claims for 2014-2015 –
The life insurance companies settled 8.51 lakh claims on individual policies, with a total claim amount payment of Rs. 11,788.67 crore. The number of claims repudiated/rejected was 18,231. These amounted to Rs. 701.69 crore. The number of claims pending at the end of the year was 7,061 and the amount involved was Rs. 453.15 crore.
 
Claim settlement ratio is the the total number of death claims settled by an insurance company  compared to the  total number of death claims received by the company.

Company
Settlement Percentage (2013-2014)
Settlement Percentage (2014-2015)
LIC
98.14%
98.19%
CLAIM SETTLEMENT RATIO FOR INDIVIDUALS

* Source – IRDAI Annual Report 2014-15 
CLAIM SETTLEMENT RATIO FOR GROUP CLAIMS

Company
Settlement Percentage (2014-2015)
LIC
​99.64%
Private Insurance Companies
91.20%


​* Source – IRDAI Annual Report 2014-15 
HEALTH INSURANCE

During the FY 2014-15, the non-life insurance sector settled 92.36 lakh number of health insurance claims that amounted to Rs. 18,223 crore towards health insurance claims.
The number of claims pending at the end of the year at 6.50 lakh is much lower than the number of claims pending at the beginning of the year at 10.07 lakh indicating improvement in claims service of insurers.

65% of the claims were settled via the cashless mode. The remaining 35% were settled through reimbursements.
 
Now let us look at insurer level details which can give you some direction in choosing an insurer –

CLAIM SETTLEMENT AND CLAIM REJECTION –
Here is data on the  private life insurance companies and the how they have handled the claims –
Company and Year of Incorporation
Claims Paid (%)
Claims Rejected (%)

Birla Sun Life (2001)
95.30%
3.02%
Max Life (2000)
96.03%
3.90%
ICICI Prudential (2000)
93.80%
5.42%
India First (2009)
72.21%
22.84%
Edelweiss Tokio(2011)
57.14%
37.82%

* Source – IRDAI Annual Report 2014-15
* The numbers may not add up to 100% as there might be claims pending.
* It is possible that newer companies have a higher rejection rate as they will have more early claims. 
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Review of IRDAI Report 2014-15

Term Insurance Plans are the best to cover risk. They have a low premium but a high risk cover.
​Here are details on companies numbers for term insurance –

Term Insurance Claim Data -2013-14

Company
Claim Amount  Initiated
(Rs. In Lakhs)
Claim Amount Paid (Rs. In Lakhs)
Ratio of claim amount paid to claim amount initiated
LIC
8905.04
8475.26
95.17%
ICICI Prudential
353.46
278.6
78.82%
Aviva
119.84
85.84
71.63%
Bajaj Allianz
440.98
360.2
81.68%
Max Life
250.01
214.6
85.84%

Source – IRDAI Annual Report 2013-14

Data on non-life insurance companies’ incurred claim ratio – Incurred claim ratio is the ratio of claims paid by the company to the premium collected. As a policyholder, the higher the incurred claim ratio, the better for you as it means premium collected is being used to pay for claims. But the number does not indicate how soon or delayed the claims are settled. 

Incurred Claims Ratio for Non-Life Insurance (2014-15)

Company
Type
Net Premium Earned (Rs. In Lakhs)
Claims Incurred (Rs. In lakhs)
Incurred Claim Ratio(%)
New India
Public
1331529
1118804
84.02%
Oriental
Public
642517
526150
81.89%
ICICI Lombard
Private
423533
344344
81.30%
Bajaj Allianz
Private
383190
275599
71.92%
TATA AIG
Private
180224
127616
70.81%
Apollo Munich*
Standalone
65588
41343
63.03%

Source IRDAI Report 2014-15
Net Premium earned in Fire, Motor, Marine, Health and Others’ Insurance
* Apollo Munich -Only Health Insurance
One can report a grievance to the insurance company if he/she has a complaint and if unhappy with the resolution can raise a grievance to IRDAI.  Here is some data on the status of grievances for life insurance companies and non-life insurance companies which can help you understand how the company treats its customers and their issues – 
Life Insurers – Grievances Data (2013-14)

Company
Opening Balance
Reported in the year
Resolved in the year
% Resolved in the year
​LIC
544
85284
85828
100.00%
​ICICI Prudential
13
19697
19677
99.83%
​Bajaj Allianz
4
52314
52308
99.98%
Aviva
0
6606
6606
100.00%
​Max Life
6
19389
19395
100.00%

​Non- Life Insurers – Grievances Data (2013-14)


Company

Opening Balance

Reported in the year

Resolved in the year
% Resolved in the year
​ICICI Lombard
25
6854
6855
99.65%
Reliance
60
2598
2618
98.50%
TATA AIG
1
4947
4948
100.00%
United India
342
6197
6321
96.67%
​Apollo Munich
​​2
​1761
​1760
​99.83%
Source – IRDAI Annual Report 2013-14 
Key Takeaways from the Report –

When you are planning to buy insurance, do not only take a look at the sum assured and the premium.  You should focus on factors such as claim settlement ratio, number of rejections, time taken to resolve complaints and time taken to pay the claim amount. This report by IRDAI helps you identify some of these factors for the insurance companies that you are considering. You should take a look at the report before you buy the insurance policy. It will help you in having better insurance.

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