“Insurance can help protect you from financial loss in an unexpected event, such as an accident or illness.” This simple statement carries immense weight, especially in today’s unpredictable world. From natural disasters to economic downturns and unforeseen health crises, life throws curveballs that can derail even the most meticulously planned financial futures. Yet, many underestimate insurance’s crucial role until they face life’s fireballs.
This blog delves into the imperative of insurance, addressing recent claim challenges and offering solutions to ensure your safety net remains strong.
The Reality Check: Recent Claim Challenges and Their Impact
Recent events have laid bare the complexities of insurance claims. Let’s examine a few instances:
The Pandemic’s Ripple Effect
The COVID-19 pandemic led to a surge in health insurance claims, overwhelming some insurers. Delays in claim processing, disputes over pre-existing conditions, and ambiguities in policy wording left many policyholders stranded.
The Insurance Regulatory and Development Authority of India (IRDAI) has reported a drop in the health insurance claim settlement ratio for FY24. Out of Rs 1.2 lakh crore in claims, insurers paid only 71.3%, leaving a substantial portion unresolved. This, coupled with over 3 crore filed claims, highlights growing concerns regarding transparency and customer satisfaction within the Indian health insurance market. (Source: The Economic Times)
Natural Disasters and Delayed Settlements
Increased frequency of floods, cyclones, and earthquakes has caused significant property damage. Many policyholders faced lengthy claim settlement processes, with disputes arising over damage assessments and coverage limitations. For example, after the recent Cyclone Biparjoy, many people from Gujarat and Rajasthan had issues with claim settlement due to the massive scale of destruction.
Cyber Insurance and Evolving Threats
With the rise of cybercrime, cyber insurance claims have become more complex. Determining the extent of damage, proving negligence, and navigating evolving cyber threats pose challenges for both insurers and policyholders. News reports are full of stories of companies and individuals whose cyber insurance claims were denied or significantly reduced due to technicalities.
These instances highlight the need for a proactive approach to insurance, going beyond just purchasing a policy.
“The risk is not in doing something that feels risky. The risk is in doing nothing.” – Andy Stanley.
Ignoring the need for adequate insurance is a far greater risk than investing in it.
Trends in Claim Settlements by Insurers in India As Shared by IRDAI for FY 2023-24
For the 2023-24 fiscal year, data released by the IRDAI shows that Indian life insurers settled 96.82% of claims within 30 days. The report also highlighted that private insurers like Aditya Birla and Tata AIA achieved higher settlement rates (around 99%) compared to LIC’s 96.42%.
| Life Insurance Companies | Claim Settlement Ratio (CSR) % | % of Total Claims |
| LIC | 98.74% | 78.35% |
| SBI Life | 97.05% | 3.20% |
| HDFC Life | 98.66% | 1.55% |
| ICICI Prudential | 97.82% | 1.28% |
| Bajaj Allianz | 99.02% | 1.21% |
| Reliance Nippon | 98.67% | 0.79% |
| Max Life | 99.34% | 1.78% |
| Kotak Life | 98.82% | 0.41% |
| Aditya Birla Sun Life | 98.07% | 0.57% |
| Tata AIA Life | 98.53% | 0.46% |
| India First | 96.92% | 0.28% |
| Exide Life | 99.09% | 0.42% |
| Bharti Axa Life | 99.09% | 0.18% |
| Canara HSBC | 98.44% | 0.16% |
| Future Generali | 96.15% | 0.09% |
| Aviva Life | 98.39% | 0.10% |
| Edelweiss Tokio | 98.09% | 0.06% |
| Pramerica Life | 98.30% | 0.06% |
| Aegon Life | 99.03% | 0.04% |
| Shriram Life | 95.82% | 0.34% |
(Source: IRDAI)
Why is Insurance Indispensable?
- Financial Security: Insurance acts as a safety net, preventing financial ruin in the face of unexpected events.
- Peace of Mind: Knowing you’re protected allows you to focus on recovery rather than financial worries.
- Asset Protection: Insurance safeguards your valuable assets, such as your home, vehicle, and belongings.
- Healthcare Coverage: Health insurance ensures access to quality medical care without depleting your savings.
- Business Continuity: Business insurance protects your enterprise from disruptions caused by unforeseen events.
- Liability Protection: Insurance covers legal liabilities arising from accidents or negligence.
Numbers Don’t Lie: Take Your Life and Health Seriously Now to Avoid 10x Expenses Later.
- WHO’s “Global Spending on Health Emerging from the Pandemic” report stated that “around 2 billion people worldwide face financial drain due to rising health expenses and medical inflation. Around 4.5 billion people globally lack access to basic healthcare. (Source: World Health Organisation)
- In India, according to a NITI Aayog report, around 10 crore people (around 7% of India’s population) fall into poverty and debt every year due to healthcare expenses. (Source: NITI Aayog)
- AB-PMJAY (Ayushman Bharat-Pradhan Mantri Jan Arogya Yojana) has done a commendable job of bringing hope, health, and happiness to millions of beneficiaries across India. Over the last six years, approximately 7.8 crore hospital admissions have been authorised under the flagship health scheme.
- The Ministry of Road Transport and Highways (MoRTH) mentioned in its report that road accidents cause significant financial burdens for affected families. Over 4,50,000 accidents and more than 1,50,000 deaths were reported in 2022. The socio-economic cost of road mishaps is around 3.1% of India’s GDP.
- Rising occurrences of natural disasters (natural and human-induced) have further burdened the healthcare system, necessitating life insurance, property insurance, and general insurance to mitigate losses. UNICEF categorised India among the world’s most disaster-prone countries, with 27 of its 29 states and UTs exposed to recurrent natural hazards.
“It’s not that I’m afraid to die; I just don’t want to be there when it happens.” – Woody Allen.
While humorous, this quote underscores our inherent vulnerability. Insurance acknowledges this vulnerability and provides a buffer against life’s uncertainties.
Overcoming Claim Hurdles
Insurance claim process can be overwhelming due to never-ending documentation, claim failures, emotional distress, etc. Here are the tried and tested ways you can get your insurance claim seamlessly.
- Check your insurance company’s claim settlement record on IRDAI website before taking an insurance policy.
- Read every word of the policy document, understand clearly and after complete satisfaction consider moving ahead with the insurance policy.
- Prompt reporting as faster notification usually expedite the insurance claim process
- Gather all the relevant documents including medical bills, estimates specific to the insurance type (health insurance, vehicle insurance, etc), and any other supporting papers and evidence.
- Keep a copy of all documents submitted with your insurance provider for future reference or whenever required
- Clear communication and understanding of every clause, limits, deductibles, exclusions, coverage, etc
- Seek professional advice if needed and maintain a detailed records of all correspondence and conversations
- Accuracy, honesty, and completeness at the time of taking an insurance and filling out claim forms, and never withhold crucial informations
- Double check paperwork before signature
- Check the solvency ratio of the insurer. According to IRDAI, (Insurance Regulatory Development Authority of India) an insurance provider in India must maintain a solvency ratio of 150% to minimise the bankruptcy risk in case of an unforeseen claim surge.
Conclusion
Insurance is not a luxury; it’s a necessity. By understanding your needs, choosing the right policies, and navigating the claim process effectively, you can ensure your financial well-being in the face of life’s inevitable storms.
