Life insurance holders settled 97% of the Covid-19 death claims
The life insurance industry has paid out more than 97 percent of the cases of death claims received during the year 2020-21 of the Covid-19 epidemic. According to the annual report of the Insurance Regulatory and Development Authority of India (IRDAI), this sector now received 21,836 claims between April 2020 and March 2021, of which 21,304 claims were paid between April 2020 and March 2021.
This includes the claims dealt with under the Prime Minister Jeevan Jyoti Bima Yojana (Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY)), which provides a life cover of Rs 2 lakh. When the epidemic knocked into India, the insurance regulator directed all the life and health insurance companies to expedite their policies.
If we look collectively, the insurers rejected 175, or 0.8 percent, of claims, with the pending Covid-19 death claims for disposal of 357 (1.63 percent) claims by March 31, 2021. However, this data does not fully indicate the fatal effect of the second wave. When the second wave held the country at the end of March 2021 and caused havoc in April and May 2021.
Although the claims of 97.56 percent have been disposed of, when it comes to the amount of the claims, this figure is very low. Life insurance companies paid only 88 percent of the amount of claims introduced. Life insurers settled only Rs 1,418.71 crore out of the total claim amount of Rs 1,617.45 crore. The rejection rate according to the amount paid compared to the claims rejected according to the policy number was very high, i.e., 5.02 percent.
It is worth noting that due to the compulsory implementation of the Insurance Act (Amendment), 2015, life insurance policies cannot be questioned after three years. But life insurers examine early claims to avoid the possibility of fraud, resulting in a high ratio of pending claims with high claim rejection.
Although choosing the insurer and policy, the claim settlement ratio is not the only criterion that you should keep in mind, but it is an important parameter. If you are buying a net risk term insurance cover of more than Rs 1 crore, then the claim settlement ratio must be analyzed on the basis of the profit amount paid before selecting the insurer.
