Decoding Life Insurance: Why Claims Settlement and Persistency Ratios Matter

Life insurance provides essential financial support during unforeseen events by compensating for lost income. Understanding Claims Settlement Ratios and Persistency Ratios can guide consumers in selecting reliable insurers. Tata AIA exemplifies industry-leading performance with high Claim Settlement and persistency metrics, ensuring customer confidence and satisfaction.

Life insurance serves as a critical financial safety net during unexpected events, offering compensation for lost income. It is vital to choose an insurer with a strong track record in claims settlement. The Claims Settlement Ratio is pivotal, reflecting the percentage of claims processed annually. A company with a high ratio is generally more reliable, but consumers should also consider the persistency ratio, indicating policy renewals over time.

According to Sanjay Arora, Executive Vice President at Tata AIA, the Claims Settlement Ratio should be analyzed over a longer timeframe for a complete picture of an insurer's reliability. Persistency ratios are equally important, showcasing customer satisfaction through policy renewals, with metrics such as the 13th Month Persistency ratio being crucial indicators.

Tata AIA illustrates best-in-class performance, with a Claims Settlement Ratio improving to 99.13% in FY24 and leading persistency ratios across multiple renewal periods. The company's commitment to customer satisfaction is evident in its improvement in the Net Promoter Score, and its substantial claims processed swiftly, contributing to positive consumer experiences.

(With inputs from agencies.)