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Over the last few decades, Gen Z, millennials, and Gen X have grown increasingly savvy about financial matters. Their increased interest in simultaneously investing and saving for their future has increased the insurance sector’s penetration in the country. As the new generations observed the spiked inflation rate over the years and witnessed the fragile reality of mortal lives, their interest and purchase intent of life insurance products like term insurance plans increased significantly.
Catering to this rising demand, more and more life insurance providers surfaced, offering a diverse and rich queue of product portfolios. Now, when seeking a term insurance plan, you must remember that with such policies, you intend to set up a long-term financial commitment with the provider and entrust the brand with a sizeable cover amount. This amount is supposed to ensure your family’s financial future in the event of your unfortunate absence.
Considering this, it’s only obvious that when you plan to purchase a term insurance policy, you will be looking at a suitable and credible term insurance provider, too. The first metric to gauge the credibility of an insurer is its Claim Settlement Ratio or CSR. So, let’s quickly dive into the concept of CSR, the term insurers with the best CSRs, and more!
Top 10 Term Insurance Providers Based on Their Claim Settlement Ratio (CSR)
What is Claim Settlement Ratio (CSR) among Term Insurance Providers?
Claim Settlement Ratio or CSR among term insurance providers is one of the primary metrics used to gauge an insurer’s credibility. This metrics is supposed to offer a reflection of the provider’s claim settlement track record.
How Do We Calculate the Claim Settlement Ratio (CSR) Among Term Insurance Providers?
To calcualte the Claim Settlement Ratio (CSR) of term insurers, we use the following formula –
(Total number of claims settled in a year by an insurer/ Total number of claims raised to the insurer across the year) * 100
The ideal CSR of a term insurance provider is set at 97 and above. However, any insurer with a CSR of below 80, is best avoided.
What are the Pros and Cons of Considering Claim Settlement Ratio As Credibility Metrics for Term Insurers?
While it’s true that the Claim Settlement Ratio of a term insurance provider is a metric used to measure the credibility of the insurer, there are a few loopholes in the metric. Hence, CSR can’t be the sole consideration when you are choosing a top term insurance plan. Here’s a look at the pros and cons of CSR –
- Pros of Claim Settlement Ratio
- Reliability on the insurer – A high CSR (97 and above) reflects that the insurer is good with settling a majority of its claims. This builds a sense of reliability among policyholders towards the insurer.
- Reflects the insurer’s market reputation – Since CSR is often the first metric that policyholders check before approaching an insurer, a good CSR ensures a great market reputation for the term insurance providers.
2. Cons of Claim Settlement Ratio
- No reflection on the time required to settle claims – CSR fails to show the time required to settle a claim. This is a crucial consideration when you think of the significant cover amount involved. Additionally, you wouldn’t want a delay in the disbursal of the sum assured during the absence of the family’s breadwinner.
- Creates potential of manipulation for the insurers – Term insurance providers can easily game the CSR by clearing claims involving lower sum assured, while ignoring cases with a higher cover amount. Hence, CSR can’t be the only factor to consider when you are looking for a suitable term insurer.
What are the Top 10 Term Insurance Claim Settlement Ratios?
- Max Life Insurance Co. Ltd.: Founded in 2000 as a joint venture between Max Financial Services and Axis Bank, Max Life is a prominent player in the life insurance industry with an annual business volume of ₹7,897 crores. Known for its comprehensive range of financial products, including term insurance plans, investment policies like ULIPs and savings plans, and health insurance, Max Life maintains credibility through strong metrics such as Claim Settlement Ratio, Amount Settlement Ratio, and Complaint Volume. Its plans are valued for their comprehensive coverage, affordability, and flexibility with multiple rider options.
2. Bajaj Allianz Life Insurance Co. Ltd.: Founded in 2001 through a joint venture between Bajaj Finserv and Allianz SE, Bajaj Allianz Life Insurance has expanded significantly over the past two decades, boasting an average annual business volume of ₹8,729 crores over the last three years. Its popularity stems from the credibility of its parent sponsors in the Indian financial market and its extensive portfolio, which includes savings plans, retirement policies, ULIPs, and term insurance plans.
The company has established itself as a reliable life insurer with an excellent Claim Settlement Ratio, strong Amount Settlement Ratio, and minimal complaint volume. Bajaj Allianz’s plans are competitively priced and offer a variety of riders for enhanced customisation to meet policyholders’ specific financial goals.
3. Life Insurance Corporation of India: Life Insurance Corporation of India (LIC) started in 1956 and is one of the oldest and largest public sector life insurers in the country. It offers a wide range of financial products, including whole life insurance, term insurance, endowment plans, and ULIPs. However, LIC has struggled to stay relevant with millennials and Gen Z due to its inability to adapt to evolving financial trends. Additionally, the lack of comprehensive policies and relatively high premiums have further reduced its popularity among younger generations.
4. HDFC Life Insurance Co. Ltd.: Founded in 2000, HDFC Life is a joint venture between Housing Development Finance Corporation Ltd (HDFC) and global investment firm Abrdn. Supported by one of India’s leading private banks with nearly 500 branches, HDFC Life ranks among the top 3 life insurance companies in India. Its strong brand value, exceptional operational efficiency, and extensive customisation options make HDFC Life a popular choice among policyholders, and we highly recommend it.
5. Kotak Mahindra Life Insurance Co. Ltd.: Founded in 2001, Kotak Life has grown into one of India’s largest insurance companies, with an average annual business volume of ₹6,356 crores from 2020 to 2023, ranking as the fifth largest general insurer in the country. Kotak Life offers a diverse range of financial products, including term insurance, retirement plans, savings plans, and ULIPs. Its credibility is supported by strong Claim Settlement Ratios, low complaint volumes, and excellent Amount Settlement Ratios. The company’s operational efficiency and client prioritisation have consistently been commendable.
6. Tata AIA Life Insurance Co. Ltd.: Founded in 2001 as a joint venture between TATA Sons and AIA, TATA AIA Life Insurance Co. Ltd. is one of India’s leading life insurers. It offers a wide range of insurance products, including term insurance, ULIPs, retirement plans, and savings policies. Known for its comprehensive and customisable policies with valuable riders, TATA AIA has a credible and well-established reputation in the industry. Unfortunately, the brand’s recent hurdle in terms of its operational efficiency is a massive concernm.
7. PNB MetLife India Insurance Co. Ltd.: PNB MetLife Insurance, a joint venture between Jammu & Kashmir Bank, Punjab National Bank, MetLife International Holdings, and M. Pallonji & Company, began operations in 2001. It offers a comprehensive portfolio of financial products, including child education policies, retirement plans, savings policies, family protection policies, and term insurance policies, with an annual average business volume of ₹8,508 crores. Although the insurer has strong Claim Settlement and Amount Settlement Ratios, its high complaint volume raises concerns about its credibility. An in-depth analysis is needed to determine if purchasing term insurance from this provider is a wise financial decision.
8. Aditya Birla Sun Life Insurance Co. Ltd.: Aditya Birla Sun Life Insurance, founded in 2000 as a joint venture between Aditya Birla Capital and Canada’s Sun Life Financial Inc., has gained wide popularity. It offers a variety of financial products, including endowment plans, term insurance policies, ULIPs, child plans, critical illness policies, and retirement policies. The insurer has earned a strong reputation with exceptional Claim Settlement and Amount Settlement Ratios, along with low complaint numbers. It is now one of the top life insurers in the industry.
9. ICICI Prudential Life Insurance Co. Ltd.: ICICI Prudential Life Insurance, established in 2000 as a joint venture between ICICI Bank and Prudential Plc., is one of India’s top 3 private life insurers. With an average business volume of ₹15,380 crores, it offers a range of products, including savings plans, retirement policies, ULIPs, and term insurance plans. Known for its affordability and comprehensive coverage, ICICI Prudential also excels in offering riders for policy customisation. Despite having only one term insurance plan, iProtect Smart, the insurer is considered one of the best in the industry.
10. SBI Life Insurance Co. Ltd.: SBI Life, a joint venture between the State Bank of India and BNP Paribas Cardif, began operations in 2000. Known for its brand equity, SBI Life offers a wide range of financial products, including life insurance, wealth creation plans, and retirement policies. Despite backing from one of India’s largest public sector banks, SBI Life isn’t widely recognised as a top life insurance provider. This is due to missing riders and features in its term insurance policies and its relatively higher premiums compared to competitors.
An In-Depth Comparison of the Top 10 Term Insurance Providers
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