The purpose of life insurance is to secure your loved ones against financial hardships due to an unfortunate event. The insurer pledges to pay a definite sum to the person you name as the beneficiary, in case of any eventuality.

The loss leading to a life claim is irreplaceable. But timely payouts as financial reimbursement for the loss act as a fallback during such unforeseen situations. However, if the insurance company fails to make good on its undertaking, the purpose is defeated.

Hence, you need to look into the insurer’s past performance when you buy a life insurance policy. Checking the insurer’s claim settlement ratio is a crucial component of such background research.

What is meant by the claim settlement ratio?

This number stands for the percentage of claims the insurance company honoured in a financial year. It is the ratio of the number of claims the insurer paid to the number of claims raised.

The formula to calculate an insurance company’s claim settlement quotient is:

Claim settlement ratio = (Number of claims settled/Number of claims received) x 100

For example, suppose an insurance company reports a 95% claim settlement percentage. It implies that the insurer settled 95 out of every 100 life claims it received. The remaining 5% either did not comply with policy terms or were fake claims.

Why should you inspect insurance companies’ claim settlement ratio?

A higher claim ratio stands for the insurer’s robust underwriting practices and risk management competence. It reflects the company’s ability to process claims and spot false or invalid applications efficiently. It is also a sign of the insurance company’s commitment towards its policyholders.

Thus, the higher the ratio, the more confident the insurer is about its capability to handle genuine claims. It is advisable to buy life insurance from an insurer consistently maintaining a high claim settlement percentage. It assures that the chances of prompt settlement of your family’s claim in their hours of need are higher.

PNB MetLife claim settlement ratio

You can determine different insurers’ claim history from the Annual Report section on the Insurance Regulatory and Development Authority’s (IRDAI) official website. The regulator uploads this report every year. As per the 2018-19 statement, the PNB MetLife claim ratio is 96.21% for the 2018-19 financial year.

The report mentions that PNB MetLife Insurance received 4170 claims in total, out of which the company settled 4012 claims. This figure signifies a very low 3.76% claim repudiation by this insurer.

An analysis of the company’s track record reveals that PNB MetLife has maintained a high 85%-plus settlement ratio over the years.

Source: IRDAI Annual Report

This consistency in PNB MetLife claim ratio shows the insurer’s inclination to honour its obligation towards policyholders.

What are the reasons for claim repudiation?

The 3.76% repudiation means PNB MetLife determined that such claims do not meet their policy terms. How can you ensure that your claim does not figure in this fraction?

Refusals in claim settlement often result from the policyholder misrepresenting facts or suppressing information. While filling the application form when you buy the policy, provide accurate data. Do not withhold details about health conditions and your family’s medical history to avoid life cover refusals or higher premiums. It can cost your loved ones the rejection of their claims when they need the financial cushion the most.

Final word

Apart from taking this precaution, you can use claim ratios as a fair benchmark to gauge the insurer’s credibility. The high PNB MetLife claim settlement ratio is a reliable indicator of this insurance company’s efficiency and dedication towards serving policyholders.

Please read the sales brochure and the terms and conditions of the policy, carefully before concluding the sale.