General insurance is essential for protecting individuals from unexpected expenses, with policyholders trusting insurers to honor claims. However, not all claims are approved. A recent report reveals that the claim-to-settlement ratio for general insurance dropped slightly to 86% in 2022-23, down from 87% in FY22. The report, compiled by the Insurance Brokers Association of India (IBAI), highlights that the claims repudiation ratio for general insurance increased to 6%, reflecting the proportion of claims rejected by insurers.
Among the insurers, public sector company New India Assurance has the lowest claim repudiation ratio at 0.2%. Other private insurers with lower rejection rates include HDFC Ergo, Future Generali, Aditya Birla Health, and Shriram. The Insurance Regulatory and Development Authority of India (IRDAI) mandates insurers to publish settlement and rejection data, which has been consolidated by the IBAI to help consumers make informed decisions when purchasing insurance policies.
New India Assurance also topped the health insurance category, achieving a 95% claim-settlement ratio among public insurers. Among standalone health insurers, Aditya Birla Health had the best claim-settlement ratio, also at 95%. Large private insurers like Iffco Tokio and Bajaj Allianz boasted claim-settlement ratios of 90% or more, indicating strong performance in settling claims.
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The report emphasizes that health insurance data combines group (corporate) and individual policies, and claim rejection rates are typically lower for corporate policies. Critics, including author Monika Halan, question why data for individual and group claims is not reported separately, as this would provide a clearer picture of the industry’s performance.
Experts suggest that incomplete or false disclosures at the time of policy purchase often contribute to claim rejections. In motor vehicle own-damage claims, New India Assurance performed best among public insurers with a 92% settlement ratio. Among private insurers, Royal Sundaram, Go Digit, and SBI General led in this category, while Future Generali was the best among smaller insurers.
Despite the growing importance of insurance, penetration in India remains low at 30%, far behind developed countries like the US, where it exceeds 90%. High taxes, such as the 18% GST on premiums, hinder many from opting for sufficient coverage. To improve the industry, experts call for tax reductions, as well as segregated data on individual and group health policies, to empower consumers in making better-informed decisions.