In insurance, trust matters. The true measure of an insurer’s reliability lies not just in the premiums they collect but in their ability to honor claims promptly and fairly. In India, the debate between private and public sector insurers often centers on this very aspect.
TL;DR
- Private Insurers Lead in Claim Settlement: Companies like Max Life and Bajaj Allianz have achieved claim settlement ratios exceeding 99%.
- Public Sector Insurers Lag Behind: LIC’s claim settlement ratio stood at 98.15% in FY 2024-25.
- Benefits Paid Comparison: LIC paid ₹3.39 trillion in benefits in FY23, about 2.16 times the private sector’s ₹1.57 trillion, though LIC’s payouts fell 4% while private insurers grew theirs by 5.98%.
- Efficiency Matters: Private insurers are often quicker in settling claims, which improves customer satisfaction.
Claim Settlement Ratios: A Clear Indicator
The claim settlement ratio (CSR) is a key measure that reflects an insurer’s reliability. In FY23, private life insurers like Max Life and Bajaj Allianz achieved CSRs over 99%, while LIC’s CSR was 98.66% (the latest figure is 98.15% in FY 2024-25)
Key Fact
LIC’s claim settlement ratio was 98.66% in FY23 and stood at 98.15% in FY 2024-25 — the leaders still sit just above 99%.
Benefits Paid: A Quantitative Comparison
In FY23, private life insurers paid out ₹1.57 trillion in benefits, marking a 5.98% increase from the previous year. In contrast, LIC’s benefits paid decreased by 4% to ₹3.39 trillion.
Did You Know
LIC paid out ₹3.39 trillion in benefits in FY23 (about 2.16 times the private sector’s ₹1.57 trillion), yet LIC’s payout fell 4% that year while private insurers grew theirs by 5.98%.
Efficiency in Claims Settlement
Aditya Birla Sun Life: 13th-month persistency ratio, 2015–2025
2015
50%
2017
56%
2019
64%
2021
72%
2023
78%
2025
77%
Source: IRDAI public disclosures on persistency ratios, 2015–2025. 13th-month persistency measures the percentage of policies still active after the first year.
Private insurers often demonstrate greater efficiency in settling claims. For instance, companies like Max Life and Bajaj Allianz have streamlined their processes to ensure quicker settlements, which builds customer trust and satisfaction.
Customer Experiences: Real-World Insights
Policyholders of private insurers frequently report higher satisfaction levels due to prompt claim settlements and transparent processes. Fast, transparent claims build trust. That matters when a family needs the money most.
Private insurer persistency ratios (2025): how many policyholders are still paying?
| Insurer ⇅ | 13th month ⇅ | 61st month ⇅ | Drop-off ⇅ |
|---|---|---|---|
| Ageas Federal | 77.46% | 44% | 33.5 pp |
| Aditya Birla Sun Life | 77% | 49% | 28 pp |
| Bandhan Life | 68.75% | 57.56% | 11.2 pp |
| Aviva Life | 63.11% | 42.72% | 20.4 pp |
| Bharti AXA | 67.4% | 22.2% | 45.2 pp |
Source: IRDAI public disclosures on persistency ratios, 2025. 13th month = policies active after year 1; 61st month = policies active after year 5. “pp” = percentage points.
Quick Tip
Ask your shortlisted insurer for their average claim settlement time, not just their CSR. IRDAI requires insurers to publish this, and it tells you far more about day-to-day service than the headline ratio.
FAQs
What is the claim settlement ratio?
The claim settlement ratio indicates the percentage of claims an insurer settles out of the total claims received. A higher ratio signifies better reliability.
Why do private insurers have higher CSRs?
Private insurers often invest in technology and customer service to streamline claim processes, leading to higher CSRs.
Should I choose an insurer based solely on CSR?
While CSR is important, consider other factors like premium costs, coverage options, and customer service when choosing an insurer.
Watch Out
A 99% CSR doesn’t reveal how long settlements took, whether claims were disputed mid-process, or how the family was treated during the wait. All of those matter when the pressure is real.
“Trust is the biggest victory in the insurance sector. I always tell my clients: when your family faces their most difficult moment, the insurer should not add to that difficulty. A transparent, efficient, fair claims process is what separates a good insurer from a bad one. Choosing the right insurer is as important as choosing the right coverage.”
— Jahnvi Gupta, IC-38 Insurance Advisor, Mumbai
Conclusion
While both private and public sector insurers offer life insurance products, private insurers often lead in claim settlement ratios and efficiency. It’s worth considering these factors, along with other aspects like premium costs and coverage, to make an informed decision that best suits their needs.
Related Reading
- Claim Settlement Ratio: What It Really Means
- Claim Settlement Ratio: Why It Misleads
- Claim Settlement Ratio: Widely Misunderstood
CSR methodology: All Claim Settlement Ratios on this page use the IRDAI Handbook formula: Claims Paid ÷ (Claims Paid + Claims Repudiated + Claims Rejected), by policy count. Pending claims and unclaimed amounts are excluded from the denominator. Source: IRDAI Handbook on Indian Insurance Statistics.
Disclaimer: This article is for informational purposes only and does not constitute insurance advice. Consult an IRDAI-registered insurance advisor for recommendations tailored to your specific financial situation and needs.
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Reviewed and Edited by
Hardik Lashkari
Hardik Lashkari is a Chartered Accountant and finance content specialist with over six years of experience writing for fintech and financial services brands. He specialises in translating complex financial topics into clear, credible content — from insurance and taxation to investing and personal finance. At Gyansurance, Hardik covers the how-to side of term insurance: buying guides, policy maintenance, digital underwriting, and the fine print buyers often miss.
