Claims data for life insurers in the December 2010 Quarter

by Manshu on March 9, 2011

in Insurance

As expected, there was a phenomenal discussion on yesterday’s post about term insurer’s sample quotes, and among the many great comments there – Salil left a comment about Form L-40, which is a mandatory disclosure that all life insurers have to make about the number of outstanding claims, new claims filed with them, number of claims they settled, and the number that they repudiated.

I went to the IRDA website, and sure enough it had links to the disclosure pages of all the insurers, and I was able to consolidate the data from those links.

I chose December 31st 2010 quarter because I wanted to compare a recent quarter and that was one which most insurers had info about. In a few cases where I didn’t find information about that quarter I took another quarter and that is showed in the table header.

I left the insurers that had no quarterly data available but there were just 3 of those.

The next thing I did was to consider data only for deaths because that’s what we’re interested in.

I have split the data into 3 tables because that is easier to read.

Now, the claims repudiated are further reported as claims repudiated that were less than 2 years old, and claims repudiated that were greater than 2 years old. Insurers that have been around for longer like LIC will have a lot of claims that are more than 2 years old, and they can’t ordinarily challenge those claims. However, the fact that there are claims repudiated that are more than 2 years old shows that there are some exceptions to this – most probably where you can establish fraud. If any of you know what this is then please do leave a comment. In the case of LIC – out of the 506 claims they repudiated 443 were of less than 2 years, and 63 were greater than 2 years, so about 12.5% of the claims they repudiated were older than 2 years – not an insignificant number.

This makes for great reading along with the sample quotes because this shows you the volume of business each insurer is doing, and how they fare in terms of paying out claims.

1 Insurer Aegon Religare Bharti AXA Life Insurance Bajaj Allianz Life Ins Birla Sunlife Canara HSBC OBC Life Ins DLF Pramerica
2 Claims O/S at the beginning of the year 22 127 2,548 173 74 14
3 Claims reported during the year 27 222 6,485 3,113 72 17
4 Claim settled during the period 13 168 6,268 3,029 50 6
5 Claims repudiated during the period 20 24 465 146 11 6

Here is the next table.

1 Insurer Future Generali HDFC Life IDBI Federal India Life (for 31st March 2011) ING Life Kotak Life
2 Claims O/S at the beginning of the year 2 208 70 112 411
3 Claims reported during the year 230 1,196 105 13 1,550 631
4 Claim settled during the period 162 1,139 75 7 1,462 627
5 Claims repudiated during the period 51 40 19 1 58 33

Here is the last one.

1 Insurer SBI Life Shriram Life (June 2010) Tata AIG LIC Reliance Life Sahara Life (Sep 2010)
2 Claims O/S at the beginning of the year 685 475 26 53,765 957 281
3 Claims reported during the year 5,745 212 883 181,165 4,025 233
4 Claim settled during the period 4,622 197 702 182,211 3,272 156
5 Claims repudiated during the period 894 138 152 506 256 70

Finally, here is a chart on the claims settled as a percentage of new plus outstanding claims for the quarter of December 31st 2010 (in most cases). (Click twice to magnify).

 

Claims Settled by Life Insurers

Claims Settled by Life Insurers

 

 

Now you have quote data, and you have volume data, so you can take a look at that and see how that stacks up. I’ll not give any opinion on these numbers because I’m still not very certain what to make of them myself, and feel that we need to look at some more data.

In the meantime, please leave your comments on what you make of all this data, and also on how to build to this post.

This is turning out to be the best reader driven discussion we’ve had so far, and it’s only appropriate because a lot of you have much more knowledge on insurance than I do.

Finally here are the links to the sources, and apologies for not responding to comments – had limited time and thought this exercise was more meaningful.

http://www.aegonreligare.com/financials.php

http://www.bharti-axalife.com/pdf/Q3-L-40_Claims_data.pdf

http://www.bajajallianz.com/Corp/aboutus/financial-info.jsp

http://insurance.birlasunlife.com/AboutUs/PublicDisclosure/tabid/386/Default.aspx             http://www.canarahsbclife.com/lifeapp/portal/canh/financialStatement

http://www.dlfpramericalife.com/PublicDisclousres.aspx

http://www.futuregenerali.in/LifeInsurance/LifeOther/LifeOtherPages/PublicDisclosure.aspx#  http://www.hdfclife.com/AboutUs/AboutUsFinancialHighlights.aspx

http://www.idbifederal.com/Pages/FinancialStatement.aspx?Year=null

http://www.indiafirstlife.com/web/indiafirst/public-disclosure

http://www.inglife.co.in/aboutus/financialstatement.aspx

http://insurance.kotak.com/about-us/corporate-overview.php#

http://www.reliancelife.com/rlic/AboutUs/Financepage.aspx

http://www.saharalife.com/temp/viewreport.asp

http://www.sbilife.co.in/sbilife/content/37_4190

http://www.shriramlife.com/formslist6.jsp;jsessionid=04B83A3EB4E5C4834D20C039209DEA79           http://www.tata-aig-life.com/public-disclosure/public-disclosure-2011-q3.html

http://www.licindia.in/publicdiscloser/2010-2011/122010/index.html

{ 16 comments… read them below or add one }

Sandriano March 9, 2011 at 9:15 pm

Hi All,

One of the important aspects of taking/maintaing an insurance is to ensure that all the details are filled accurately in the policy document at time of buying the insurance so that in the unfortunate event of insurer’s death, it makes it easy for his/her near and dear ones while claiming the insurance.

With this context, I would like to ask anyone who has claimed the term insurance amount successfully from LIC as to what documents need to be produced as part of identification/proof, apart from the death certificate, while claiming the insurance amount.

Regards,
Sandriano

P.S. I have no necessity as of now, but I just wanted to ensure that all the details are accurate in my policy and they match with any other identification source which may be required to be produced while claiming the insurance.

Reply

Manshu March 10, 2011 at 7:45 am

That’s a good question, and I hope you get an answer for that. I’ll keep an eye out to see if I can find someone willing to share this info.

Reply

Salil A March 9, 2011 at 9:58 pm

Hi,

1. I think one way to look here is that there is a steep difference between some Online Plans vs LIC (2x – 2.5x difference) which over a 25 years period is significant. So we need to look at cost as well as reliability and manage a tradeoff which benefits us.

2. The whole idea of buying Life Insurance (not for tax saving) is to ensure that your family doesn’t have to face financial troubles after you are gone. A cheap online plan which is unreliable wont help in case you pass away as your family wont get any benefit (apart from few 1000’s saved in premiums)

3. LIC is very reliable – PSU, Old, Long History etc. (yet the commission chain increases premiums and makes it expensive)

4. If someone is earning 10L p.a. then by popular standards he should have cover of atleast 40 lacs. Why not create a 1/3rd each value in one online plan (cheapest premium with reduced reliability), 1 LIC Term Plan (expensive premium but reliable), and one Money Back plan (return of all premiums at around 7% in case there is no death).

5. A pure money back plan is too expensive for say 40 lacs so try to create a mix like we do in porfolio management of risk vs return and evaluate cost and benefit scenario.

6. Say if you die after 10 years where you have taken a cover of 40 lacs using this 1/3, 1/3, 1/3 rule – what would be the payoff. And say what would you get if nothing happens to you for 25 years. Then create a scenario analysis and see whether it makes sense to diversify in this manner and what is an optimum case for the person taking life cover.

7. I have these ideas but dont know how to actually crunch these nos.

These are just my thoughts on the topic. I am only a learner and I am grateful that your blog is allowing people to share ideas and learn about personal finance.

Reply

Manshu March 10, 2011 at 7:44 am

I think 2 term plans are enough, and adding anything more than that will complicate matters. Also, I don’t feel it’s a good idea to get money back on this as that will then dilute your focus from insurance, and will get hamper effective decision making.

I’ve never heard of this rule as well – is it a rule of thumb kind of thing, or what is the reasoning behind this?

Reply

Salil A March 10, 2011 at 6:32 pm

I am aware of the 2 policy thumb rule while going for Term Plans. I was trying to evaluate if mixing a money back plan can have any diversification benefit. There is no doubt that pure Term Insurance is the cheapest and best option and Equities or other avenues should be considered for investment purposes.

Reply

Vishal March 9, 2011 at 11:08 pm

Manshu,

Great Job… The claim settlement ratio of many private insurers is pretty low. This has been so historically and by the data above presented, continues to be so. In fact, late last year, I carried a similar article on my blog wherein I had compared their performance for the financial year 2010. Results were similar for private insurers except for ICICI Prudential which had relatively good claim settlement ratio. ICICI Pru recent performance is not available in your post. Would be great if you are able to update it.

Link to the referred article: http://goo.gl/0LRSr

Reply

Manshu March 10, 2011 at 7:42 am

Has ICICI Pru been in the market for more than 2 years? Did you deep dive into how much of these numbers are affected because these insurers are just less than 2 years old?

Reply

chints March 9, 2011 at 11:15 pm

No stats for ICICI Prudential?

Reply

Manshu March 10, 2011 at 7:41 am

I wasn’t able to get to their site – I don’t remember whether it was down, or I couldn’t find the relevant page at the time of making this list.

Will update this later though.

Reply

January July 23, 2011 at 4:36 pm

I love reading these atircels because they’re short but informative.

Reply

Sanjoy das July 7, 2011 at 6:47 pm

Hi every body can any body give me a suitable online term pla from below mentioned list
1. I protect
2.I term
3.Smart life
4.E preferd

Reply

Shameek Sharma February 6, 2012 at 4:33 pm

Hi,

There is no mention of Aviva Life Insurance here.

Could you please tell us how to find the numbers of that company as well?

Best Regards,
Shameek

Reply

Atal bihari February 25, 2012 at 9:34 pm

Plz suggest me for best term plan

Reply

Dsouza, james July 16, 2012 at 9:47 am

Quite a good read and good understanding by the writer. One point to clear up though is that:
Note that the settlement percentage is not necessarily due to rejection, but as many people do not come forward to claim, possibly as unaware of insurance policy. This is more so with LIC who has a huge base of customers.

Another point is that Term insurance is not necessarily the cheapest and best option. Many so called experts keep harping on this and I think people are not looking to see if it is incorrect.
First keep in mind that insurance is meant to provide financial protection to families.
So if a person can afford it a traditional wholelife plan is best. This is so as Term insurance is very costly and not at all cheap as age increases and is not given after age 65, though that fact is it is normally not given after age 50 by most insurance companies unless the person has exceptionally good health. What is the use of a supposedly cheap plan when it does not cover you when you need it the most as most people after 60 stop earning?
On the other hand a good wholelife plan with premium holiday can cover you till age 100; the best thing is its cover keeps increasing year by year.

Another point I’d like to make online Term insurance or any other is not necessarily cheaper and a hoax by insurance companies to get people to buy them. Beware that the companies setup huge call centers, pay salaries and incentives (instead of just commissions) bonus, have backup staff, has rental costs, has building maintenance costs etc and is more expensive for them.
Just think why in normal savings plans if a person closes before 3 or 5 yrs they do not get the first year’s premium and only part of the 2nd and 3rd yr premiums. This is as huge commissions are paid to the company sales managers, goodies for them; foreign trips etc to get the market. No doubt they repudiate claims on a huge scale as they sell a piece of waste paper.
Another thought for you: Check it out online car premiums are Not cheaper for above reasons but advertised by cos as manipulated as many benefits are removed and some loss making to buyer are inserted, but let’s write that another day.

Reply

Manshu July 17, 2012 at 4:42 am

Can you give an example where the cover that comes with a whole life plan is less than the cover of a term insurance? Also, can you give the source of the information where you say settlement includes people who just don’t come forward for claims. Thanks!

Reply

Dsouza, james July 17, 2012 at 9:01 am

Manshu,
The sum assured coverage of a wholelife plan can be less or more than a term insurance, as it can be tweaked if the agent has the skill and is unlimited unlike a term plan. Need to provide financial proof though for large amounts, a good example if LIC’s Jeevan Anand where premiums can stop anywhere after 10-20 yrs. I’d like to reiterate and as I said go for wholelife – you get your money back but coverage continues till age 100 with the 2nd sum assured covering you.
The trick here is as you guys mentioned, LIC will pay when the time comes unless there is a serious problem with the claimant’s approach or no one approachs – I would not advocate many pvt cos whose intentions are not good or managements are not good and are splurging money under different spend heads of policyholders money to grab business.

To answer your other question “source of the information where you say settlement includes people who just don’t come forward for claims” – Manshu, I am an agent (an educated one I can assure you) and understand finance and those who know, know that quite a few claims are not claimed.
Govt. and RBI is struggling to payout as a government company like LIC cannot keep it indefinitely. Check RBI reports and Govt. guidelines, there was one recently of a few months ago too on the issue.

Reply

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