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SBI Life Claim Settlement Ratio for Term Insurance

SBI Life Claim Settlement Ratio for Term Insurance

Vibhu Singh2608 11-Jul-2018

The whole point of purchasing a term life insurance policy is to have the nominee or the surviving members of the family have financial stability in the event of demise of the policy holder.
Claims settlement ratio is one such aspect to consider when deciding on a vendor offering life insurance policies. This ratio speaks about the commitment of the company towards its policy holders and how well do they serve their customers when a claim, death or maturity, has been filed.
Claim settlement ratio is the result of total claims approved by the insurance company (payout should be complete), divided by the total claims received. The Insurance Regulatory and Development Authority, instituted in the year April 2000, aimed at regulating the insurance sector and improving customer experience, releases the claim settlement ratio for different insurance companies every year.
If you are looking to purchase a SBI life term plan, you may be interested to know that SBI life insurance stands at 93% in terms of claim settlement ratio for the financial year 2015 – 2016.
How Is The Claims Ratio Calculated For An Insurance Company?
These ratios are calculated in terms of percentage. For example:
•    A company receives 1000 claims for one financial year.
•    Out which 960 claims were approved, that is the nominees were paid the insurance amount
•    Out of the remaining 40 claims 30 were rejected
•    And remaining 10 are yet to be worked upon.
The above numbers weave the story of the company’s claim ratio
•    The claim settlement ratio of the company is (960/1000) = 96%
•    The claim rejection ratio stands at (30/1000) = 3%
•    The claim pending ratio is (10/1000) = 1%
How Does SBI Life Insurance Plans Fare In Terms Of Claim Settlement Ratios?
As per industry standards, the claim settlement ratio for insurance companies stands at 97%. As per IRDA, for the year 2015-2016, SBI life term plan stands at 93%, with an annual business premium of Rs.8,930 crores and the total value of claims at Rs.390 crores.
SBI insurance has been in the claim settlement range of 80% - 95% for the past 6 years. They started at 82% in the year 2010 – 2011, reaching a high of 95% the next year and then consistently performing for the next two years at 94% and 91% respectively. The year 2014 – 2015 saw a dip in the ratio with the claim settlement standing at 89%.  
Considering the above example for claim ratios, lets take a look at SBI life insurance claims for the year 2015 – 2016:
•    SBI opened the year with 470 pending claims and received an additional 15,632 claims, which brought the total number of claims to 16,102.
•    Out of which 15,037 claims were approved, payout made to the nominees
•    767 of the total claims were rejected
•    And the remaining 298 claims are still awaiting their fate
This brings the claims ratio for SBI life insurance as below:
•    The claim settlement ration for the company is (15,037/16,102) = 93.39%
•    The claim rejection ratio for the company is (767/16,102) = 4.8%
•    The claim pending ratio for the company is (298/16,102) = 0.2%
How Efficient Is SBI In Closing Claims?
Another essential factor to consider is the number of days taken by an insurance company to process your claim. If you are a nominee for a SBI life term plan, in this scenario efficiency would mean the number of days you would have to wait on an average before you receive the assured amount of money. This number speaks volumes about a company’s commitment towards its customers in their time of need.
SBI life insurance on an average takes 204 days to successfully settle a claim.
How Does SBI Fare In Comparison To Other Insurance Companies?
•    LIC is the number one insurance company in India, with the largest customer base and with a claim settlement ratio of 98%. For the year 2015 – 2016 they had an annual new business premium of Rs.2,64,975 crores.  The total value of claims settled was Rs.9,690 crores, again being the highest in comparison to other insurance companies.
•    Max Life Insurance has a claim settlement ratio of 97%, with Rs.261 crores being the total values of claims settled.
•    Tata AIA Life coming also ended their year at a claim settlement ratio of 97% with Rs.87 crores on the total values of claim.
•    ICICI Prudential Life had a claim settlement ratio of 96% with Rs.406 crores amounting to the total value of claims settled.
If you have decided on purchasing a SBI life term plan, the claim settlement ratio should be one factor to consider but not the only one. First and foremost get your requirements in place, your goal of buying insurance, the tenure, the sum you are looking at. Base your decision on your requirement and not solely on claim settlement ratios.

Updated 14-Nov-2019

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