People buy general insurance to cover for emergencies so that they do not have to make out-of-pocket hefty payments. They do not just put their money in, but trust while paying premiums. However, not all claims get approved. A recent report reveals that the claim-to-settlement ratio, which shows how many claims were honoured by insurers, in 2022-23 at 86%, which is down from the 87% in FY22.

The detailed report by the Insurance Brokers Association of India (IBAI) from data presented by insurance companies reveals that claims repudiation ratio rose to 6% for general insurance, which includes coverage for motor, health, fire and marine cargo.

This is the claim rejected by an insurance company as a proportion of the total claims made by its policy buyers. Public sector insurer New India Assurance has the lowest claims repudiation ratio of 0.2%. Other big private insurers with lower rates of claims rejection are HDFC Ergo, Future Generali, Aditya Birla Health and Shriram.

Insurance watchdog IRDAI makes it mandatory for insurance companies to put out settlements and rejection data on their websites. The IBAI has collated the data from insurers and put it in a report, which could help people make informed choices about a company’s track record while buying insurance policies. In the Policyholder’s Handbook, the IBAI has classified the general insurers into four categories — Public Sector General Insurers, Large Private Sector General Insurers, Other Private Sector Insurers, and Standalone Health Insurers.

In the health insurance category too, New India Assurance came on top among the public insurers with a claim-settlement ratio of 95%. Aditya Birla Health, with a claim settlement ratio of 95%, was the best among standalone health insurers. Iffco Tokio and Bajaj Allianz were among the top large private sector general insurers with the best claims-to-settlement ratio of 90% or more, according to the IBAI handbook.

What has to be remembered in the case of health insurance is that it is combined data for group (corporate) and individual policies. Claim-rejection rates are historically lower in the case of corporate policies.

“Irdai does not give data for individual and group claims separately. Why not? Who is it protecting,” asked author-influencer Monika Halan. The real picture will emerge when separate claim-settlement data is available for individual health insurance policies. According to experts, incomplete or false disclosure, consciously or unconsciously, at the time of purchase of policies also contribute to rejection of claims.

In settling motor vehicle own-damage claims too, New India Assurance was the best public insurer with a claim-settlement ratio of 92%. Among large private sector insurers when it came to own-damage claim settlement, Royal Sundaram, Go Digit and SBI General came on top. Future Generali was the top among small insurers.

The insurance coverage, be it life or general, is low in India but the tax on insurance premiums, at 18%, is high. In India, insurance penetration is at 30%, and low in comparison to developed countries, like the US, where it is over 90%. Though there is no social security net and government medical infrastructure is rickety, the high 18% GST on insurance premiums defies logic.

Many users settle for a smaller cover due to high premiums, experts have told India Today Digital. Several reform measures are needed for the growth of the insurance industry and relief for people so that they can get better cover for themselves. Not just in terms of reduction of tax, there is a need for segregated data on claim-settlement ratios for individual and group policies for people to make an informed choice.

Source: India Today