1.

Claim Ratios
What is Claim Settlement Ratio?
Claim Settlement Ratio gives us an idea about the claim solving ability of the insurance company. If
claims are intimated and the insurance company solves those, claim settlement ratio would be good.
In simple words - claim settlement ratio is the number of claims settled by the insurance company out
of every 100 claims it has received.

What we need to check in CSR?

Higher claim settlement ratio implies that majority of claims are getting solved. Higher is the claim
settlement ratio for the company, the better the company.

What is Claim Repudiation Ratio?

A repudiation ratio is a measure of claims rejected by the insurance company. Claim repudiation ratio
gives us an idea about the percentage of the claims rejected by the insurer to total claims made. In
simple words - Claim repudiation ratio is the number of claims rejected by the insurance company out
of every 100 claims it has received.

What we need to check in CRR?

The lower this ratio, the higher the settlement of claims. So lower the CRR, better for proposer. But
sometimes it wont give clear idea because the reasons for rejection could be false claims, untimely
intimation, coverage not covered under the policy etc.
FY 2007-08
Life Insurers Claim Ratios for FY 2007-08
FY 2008-09
Life Insurers Claim Ratios for FY 2008-09
F
Y 2009-10
Life Insurers Claim Ratios for FY 2009-10
FY 2010-11
Life Insurers Claim Ratios for FY 2010-11
F
Y 2011-12
Life Insurers Claim Ratios for FY 2011-12
FY 2012-13
Life Insurers Claim Ratios for FY 2012-13

How do claims ratios help me?

The point of these claim ratios is to make you aware about the claim handling by the insurer. In case
of unfortunate demise, your loved ones should not face problems of getting the claim amount. The
claim ratios assist you in making comparison of life insurance companies. However new insurance
companies typically have low settlement ratio but it does not depict the real picture. If claims are being
made so early in the term, theres possibility of fraudulent cases. Also new insurer might have 20
claims compared to veteran insurer with 2000 cases which tips the ratio in latters favour.

Should I follow claim ratio in making decision?

Claim ratios are just mathematical tool in making the analysis. They might not reflect the true
scenario. Example- An insurer gets 10 claims out of which just 3 genuine claims are settled. Claim
settlement ratio would just be 42% which would be unfair to insurer as 7 cases turned out to be fraud.
It is important to keep holistic view while making the decision, consider ratios but also products
benefits, quotes etc too. Moreover, while buying an insurance cover you should also need to focus on
the insurance companies claim settlement ratio, profitability of the insurance company, premiums
charged, While buying an insurance policy you should incorporate some financial planning aspects
such as your age, number of dependents in the family, your income income, expenses etc. which will
help you to assess your Human Life Value (HLV), and lead you to buy the right insurance cover

2. Solvency Ratio
What is Solvency Ratio?
The solvency of an insurance company corresponds to its ability to pay claims. The Solvency ratio is a
way investors can measure the companys ability to meet its long term obligations.

What we need to check in solvency ratio?

The higher the ratio is the better equipped a company is to pay off its debts and survive in the long
term. In general a ratio of 20% or higher is considered to be a good ratio where as a ratio of 20% or
lower is considered to be a bad ratio. As most ratios should be compared with other companies in the
same industry group.
FY 2005-06
Life Insurers Solvency Ratios for FY 2005-06
FY 2006-07
Life Insurers Solvency Ratios for FY 2006-07
F
Y 2007-08
Life Insurers Solvency Ratios for FY 2007-08
FY 2008-09
Life Insurers Solvency Ratios for FY 2008-09
F
Y 2009-10
Life Insurers Solvency Ratios for FY 2009-10
FY 2010-11
Life Insurers Solvency Ratios for FY 2010-11
F
Y 2011-12
Life Insurers Solvency Ratios for FY 2011-12
FY 2012-13
Life Insurers Solvency Ratios for FY 2012-13

What is the minimum Solvency Ratio requirement?

1- Life Insurers - the Required Solvency Margin is the higher of an amount of Rs.50 crore (Rs.100
crore in the case of Re-insurers) or a sum which is based on a formula given in the Act / Regulation.
2- General Insurers - the Required Solvency Margin shall be the maximum of the following amounts (a) Fifty crore of rupees (one hundred crore of rupees in the case of Re-insurer) ; or
(b) A sum equivalent to twenty per cent of net premium income; or
(c) A sum equivalent to thirty per cent of net incurred claims, subject to credit for re-insurance in
computing net premiums and net incurred claims being actual but a percentage, determined by the
regulations, not exceeding fifty per cent.