Life insurers' claim settlements stable despite Covid – Economic Times

Mumbai: Indian life insurers’ claim settlement ratios have remained mostly stable during the Covid-19 period compared with earlier years despite an uptick in claims as the regulator pushed for easier settlements amid a once-in-a-century pandemic.

The settlements-to-claims ratios of the country’s top life insurers were in the range of 98.3% to 99.3% in 2020-21.

The claim settlement ratio shows the percentage of life insurance claims an insurer settles out of the total number of claims it receives including pending ones during a financial year. It is an important measure to consider before buying a life insurance policy.

Among the large life insurers, Life Insurance Corporation of India’s (LIC) claims settlement ratio improved to 98.3% in 2020-21 from 95.4% in FY20 to equal the pre-pandemic FY19 ratio of 98.3%, according to the draft red herring prospectus (DRHP) ahead of its much-anticipated initial public offering (IPO).

The top five private-sector insurers, SBI Life, HDFC Life, ICICI Prudential Life, Max Life, and Bajaj Allianz Life, reported a stable 99.3% claim settlement ratio on an average in FY19, FY20 and FY21.

Among them, SBI Life’s settlement ratio dropped from 98% in FY19 to 97% in FY 20 and 96.4% in FY 21, while ICICI Prudential Life Insurance saw the most improvement from 95.4% in FY20 to 98% in FY21.

However, settlement ratios for all life insurers for the first six months of the current fiscal were lower than their ratios for the full FY21.

LIC claim settlement ratio stood at 94.2% until September this year against 98.3% last fiscal, whereas SBI Life’s ratio dipped to 86.5% and ICICI Prudential’s to 91%. HDFC Life’s settlement ratio in the first half fell to 98% from 99.4% in FY21, Max Life’s to 76.1% from 99.3%, and Bajaj Allianz’s to 95.1% from 99.7%.

Analysts said the first six months cannot be compared with the last fiscal especially in a year where the hit from the pandemic was hardest. “There would be spillovers into the second half for sure,” said ASV Krishnan, senior analyst at HDFC Securities. “Reporting and claims take a few weeks if not months, so we should not conclude anything from the first six months’ data.”

“Largely, as a trend, claim ratios have dipped slightly and then bounced back,” said Asutosh Mishra, head of research at Ashika Securities. “But it was also a difficult time as reporting was not up to date and also all deaths had to be reported in a certain format, which… was a complicated process.”