Kathmandu: Among the various parameters of measuring the service quality of life insurer, claim settlement is an important perspective.
Even in our neighboring country India, the insurers highlight their claim settlement status for the promotion of their business. As of the case of Nepal, the claim settlement ratio has not been used as the major tool of business promotion. Highest claim ratio gains the confidence of customer.
With the emergence of new life insurance companies, we can witness few of them have 100 per cent claim settlement based on the published 3rd quarter report of FY 77/78.
Among 19 life insurer, 5 life insurers viz Jyoti Life, IME Life, Reliable Nepal, Sanima Life and Sun Nepal Life Insurance, have zero unpaid claim. It means that they have settled all the insurance claim of their client. Based on the 3rd quarter’s report, remaining 14 insurers have yet to settle the claim of worth Rupees 3 arba 15 crore in total.
Among them, Nepal Life Insurance has the highest unpaid claim of Rupees 1 arba 46 crore. And Met Life has Rupees 74 crore 44 lakh claim to be paid. Meanwhile, National Life and LIC Nepal have pending claim of Rupees 38 crore 78 lakh and Rupees 21 crore 73 lakh respectively. There are various reasons behind unpaid claim. Few of them are incomplete claim documents, fraud, delay in the further detail investigation by the insurer against suspicious claims etc.
Unpaid claims are liabilities for the insurer. Incase, of unpaid claim, insurer has to make double provision against it. It will ultimately hit the profit in the balance sheet of the insurer.
The regulatory authority, Beema Samiti encourages for higher claim entertainment and in some cases forcefully directs insurer to entertain the claim. The main motive behind it may be that, in comparison to the total volume of premium collection, the claim settlement is very negligible in industry average. Higher the claim settlement, higher the customer satisfaction. It will ultimately contribute to attract more people to come under the protection of life insurance.
To minimize the unpaid claim, higher proper underwriting may play vital role. Underwriting is the process of scrutinizing a proposal for life insurance based on the information provided by the proposer and the mediator(agency). Underwriter must take into consideration the risk factors like medical fitness status of the proposer (life to be insured), financial status, source of earning, the motive behind opting for the insurance coverage, previous life insurance plan (if any) etc.