Page 37 - Life Insurance Today March 2016
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Digitalisation of LIC under progression LIC has the best claim
The decision by Life Insurance Corpo- Sreelakshmi, COO of SHCIL Projects, settlement report
ration to maintain its own records in said, "We will be exiting the insurance
digitised format may force insurance repository business as we feel having LIC's claim settlement at 98.19 per
repositories to either shut down or al- a corporate agency licence will make cent is better
ter their business plans. than the en-
more sense from a business tire private
The five insurance reposito- perspective." sector's
ries operating in the market 89.40 per
are NSDL Database Manage- S. V. Ramanan, CEO, CAMS In- cent. It has
ment, Central Insurance Re- surance Repository, said LIC's
pository, CAMS Repository decision to not tie up with any rejected only 1.15 per cent claims
Services, SHCIL Projects, and Karvy In- IR is a dampener to the reposi- compared with the private sector's
surance Repository. According to tory business. 7.78 per cent. In actual numbers,
IRDAI, LIC has a 73 per cent market the rejections will be much higher
share in the life insurance segment. IRDAI has asked insurers to pass on to because of LIC's sheer size. LIC sold
insurance repositories only those poli- 12 million policies in the first nine
Incidentally, SHCIL has decided to exit cies that are to be issued electroni- months of 2014-15, while the entire
the insurance repository (IR) business. cally. Even here, the insurer has the sector sold 16 million policies.
Confirming the development, Pandula option to maintain the policy in the
digital format on its own. Investment advisor Harsh Roongta
believes claim settlement is a good
Jeevan Shikhar - another benefitting plan from LIC starting point as it helps weed out
companies with bad settlement ratio.
LIC has launched 'Jeevan Shikhar', a 20,000 only, with a policy term of 15 "Most claims are made in the initial
closed-ended plan which is open for years. On the policyholder surviving to years, leading to investigation from
sell from January 11 up to March 31. the end of the policy term the matu- all insurers because of the premature
It is a non-linked, with prof- nature of the claim. If IRDAI gives
its, single premium plan, rity sum assured along with claim settlement numbers of this ini-
wherein the risk covered is loyalty addition shall be pay- tial period, the entire sector is likely
10 times of tabular single able. In case of death of the to be on a similar footing.Another
premium providing a combi- life assured during first five reason for rejections from private
nation of savings and risk cover. The policy years and after com- sector players would be due to
plan is available from ages 6 to 45 mencement of risk 'sum assured on higher sum assured”.
years. death' equal to 10 times the tabular
single premium will be payable. “Today, there are term policies of Rs
2 crore and above. In LIC's case, the
Minimum maturity sum assured is Rs On death before commencement of sum assured amounts will be much
1 lakh, with maximum basic sum as- risk, single premium without interest smaller," Roongta adds. An additional
sured having no limit. The maturity after deducting extra charged, if any, reason for less acceptance of private
sum assured can be in multiple of Rs will be refunded. sector claims is that they has more
innovative products and can become
LIC leads in Life Insurance claim settlements: IRDAI re- victims of fraud more easily, leading
to higher claims rejection. Prospec-
port tive policyholders should also be
looking at other parameters such as
Life Insurance Corporation of India to 98.19 per cent during the year servicing and pricing as well. "If I am
continues to maintain its lead in the 2014-15, compared to 98.14 per cent a healthy person who wants a good
life insurance industry with respect to during the previous year. term policy, I will only go for the
claims settlement, according to cheapest product with decent fea-
IRDAI's annual report. The claims settlement ratio for private tures," adds Roongta.
life insurers increased 89.40 per cent
"The claims settlement ratio of LIC during financial year 2014-15 from 37
was better than that of the private life 88.31 per cent during the previous
insurers," the regulator said in its an- year. Private insurers had repudiated
nual report. According to the report, more number of claims (9,486) com-
the settlement ratio of LIC increased pared to LIC (8,689).
Life Insurance Today March 2016
