Evaluation of Claim Settlement on Operating Efficiency and Profitability in Indian Life Insurance Sector

The study investigates the claim settlement scenario in the Indian life insurance sector, focusing on individual death claims and its impact on profitability. The analysis is based on secondary data obtained from IRDAI’s annual reports (2013-14 to 2023-24) and life insurers' reports. Simple ratios and correlation analysis are used to examine the relationship between claim settlement indicators and financial performance. Linear regression analysis is applied to assess the effect of financial indicators such as equity share capital, assets under management, and profit after tax on individual death claims.

The findings highlight that the life insurance sector has exhibited high claim settlement efficiency, with a settlement rate of 98.45% in 2022-23. Private sector insurers, such as Max Life and HDFC Life, have recorded some of the highest settlement rates. The correlation analysis reveals significant positive relationships between equity share capital and individual death claims, as well as between assets under management and equity capital. Interestingly, profit after tax shows weak correlations with other variables, suggesting that profitability is influenced by factors beyond the scope of the analysis. Regression results further indicate that equity share capital has a significant positive relationship with individual death claims, while profit after tax has a negative but significant effect. Overall, equity capital and profitability play crucial roles in shaping the claim settlement process, while assets under management do not significantly impact claim volumes.