Imagine an individual who has wisely invested in a term insurance plan to safeguard the financial well-being of their beloved family members. Diligently fulfilling their responsibility, they pay the premiums on time, fully aware of the importance of this financial safety net. Unfortunately, life takes an unforeseen turn, and the individual tragically passes away, leaving their family in a distressing state of financial vulnerability.
In the aftermath of this devastating loss, the family proceeds with the necessary procedures and anticipates receiving a payout that would provide them with the necessary support during this trying period. However, upon receiving the settlement, they are confronted with the harsh reality that the amount falls significantly short of their expectations, leaving them grappling to make ends meet.
It is at this crucial juncture that the significance of an insurance company's Amount Settlement Ratio (ASR) becomes apparent because had this factor been considered during choosing of the insurer, the current financial disaster could have been completely avoided. But in this context, why are we so specifically focused on ASR? Let’s find out!
Understanding Amount Settlement Ratio in Term Insurance
The Amount Settlement Ratio is a metric to evaluate how effectively insurance companies are settling claims. This ratio serves as a tool for individuals to assess an insurer's track record in providing timely and accurate financial compensation when a claim is filed.
In simple terms, the ASR is the percentage of the total amount of claims received by the insurance company that is actually settled.
- A high ASR indicates that the insurance company is settling claims fairly and efficiently.
- A low ASR may indicate that the company is delaying or denying claims, which can lead to unhappy customers and damage the company's reputation.
By conscientiously considering this ratio when selecting an insurer, an individual can ensure that their beloved family members receive the appropriate amount of financial assistance precisely when it is needed the most, should any unfortunate circumstances arise.
However, it's important to note that the ASR should not be the ONLY factor you consider when choosing an insurance company. Other factors, such as
- the company's financial stability,
- customer service, and
- coverage options,
-should also be taken into account.
How is the Amount settlement ratio calculated?
- CASE 1: When ASR is less than 100
The Amount Settlement Ratio for this insurance company is 80%. This means that they settled 80% of the claims they received and the rest 20% is either denied by the company or they are delaying in settling those claims.
- CASE 2: When ASR is 100
An ASR of 100% means that the insurance company has settled all the claims they received, while an ASR of less than 100% indicates that they have not settled some of the claims.
Amount Settlement Ratios of all Life Insurance Companies in India
| Name of Life Insurer | Amount Settlement Ratio (A.S.R.) | Average of last 3 FY |
|---|---|---|
| 2021-2022 | ||
| Aditya Birla Sun Life Insurance | 96.15% | 93.90% |
| Aegon Life Insurance | 98.76% | 97.01% |
| Ageas Federal Life Insurance | 91.02% | 87.33% |
| Aviva Life Insurance | 98.43% | 96.87% |
| Bajaj Allianz Life Insurance | 93.45% | 92.99% |
| Bharti AXA Life Insurance | 96.36% | 96.89% |
| Canara HSBC Life Insurance | 96.42% | 93.82% |
| Edelweiss Tokio Life Insurance | 95.12% | 83.15% |
| Exide Life Insurance | 96.29% | 92.50% |
| Future Generali India Life Insurance | 89.60% | 88.65% |
| HDFC Life Insurance | 89.38% | 87.34% |
| ICICI Prudential Life Insurance | 95.49% | 92.11% |
| IDBI Federal Life Insurance | - | 89.27% |
| IndiaFirst Life Insurance | 91.10% | 90.38% |
| Kotak Life Insurance | 95.53% | 93.07% |
| Max Life Insurance | 96.71% | 95.54% |
| PNB MetLife India Insurance | 93.35% | 91.50% |
| Pramerica Life Insurance | 96.80% | 96.53% |
| Reliance Nippon Life Insurance | 95.39% | 94.81% |
| Sahara India Life Insurance | 97.09% | 94.07% |
| SBI Life Insurance | 94.55% | 90.17% |
| Shriram Life Insurance | 2.78% | 54.38% |
| Star Union Dai-ichi Life Insurance | 91.41% | 92.97% |
| Tata AIA Life Insurance | 94.65% | 92.71% |
| Life Insurance Corporation of India | 96.02% | 95.08% |
Importance of a High Amount settlement ratio
Let’s find out the significance of a High Amount Settlement Ratio (ASR) from the perspective of both the customer and the company.
From the perspective of the customer, a high ASR is important because:
- Customer Assurance: It indicates that the company is responsive to the policyholder’s needs and concerns, and is committed to settling claims in a timely and fair manner.
- Peaceful Protection: A high ASR can provide policyholders with much-required peace of mind, as they know that they will be compensated appropriately if they pass away, which is covered by their policy.
- Reliable Settlement: It can reduce the stress and uncertainty associated with filing a claim, as customers are more likely to trust such companies to settle their claims fairly.
From the perspective of the company, a high ASR is important because:
- Boosting Loyalty: It indicates that the company is settling claims efficiently and fairly, which can lead to increased customer satisfaction and loyalty.
- Trustworthy Reputation: A high ASR can help build the company's reputation in the industry, as it shows the company is reliable and trustworthy.
- Legal Protection: It can reduce the risk of legal action or regulatory fines, as customers are more likely to accept the settlement offered by the company if they believe it is fair.
Factors Affecting Amount Settlement Ratio
- Fraudulent Claims: The insurance company may reject fraudulent claims or settle them for a lower amount, which can affect the settlement ratio. It is crucial to refrain from making false claims or exaggerating the loss to receive a higher payout.
- Nomination Accuracy: In case of the policyholder's demise, the nominee's incorrect or incomplete information can lead to claim settlement hiccups. It is important to keep the nominee information up to date and accurate to avoid claim rejection or delays.
- Policy Comprehension: The policyholder's lack of understanding of policy terms and conditions can lead to claim settlement issues. It is essential to carefully read and understand the policy document and seek clarification from the insurance company or agent in case of any doubts or confusion.
- Truthful Disclosure: The policyholder's failure to disclose relevant information or to provide false information while purchasing the policy can negatively affect the settlement ratio. It is important to provide accurate and complete information while purchasing a policy to avoid claim rejection or underpayment.
Conclusion
Choosing the right insurance policy is vital for ensuring financial protection during unforeseen events. When selecting an insurance company, the Amount Settlement Ratio (ASR) plays a crucial role. A high ASR indicates that the insurer settles claims efficiently, providing peace of mind to policyholders. However, it is essential to consider other factors like financial stability, customer service, and coverage options before making a decision. Thorough research and comparisons will help secure the well-being of loved ones, offering the peace of mind needed to face uncertainties ahead.