When it comes to the payout ratio of insurance companies what will determine it is the policyholder’s claim profile and loss ratio.
And just as any financial organisation when an entity makes an investment decision, it exposes itself to a number of financial risks. Let’s say the insurer paid more in claims than they received in premiums. Clearly this won’t work out well as for a short-term insurer to remain sustainable, there has to be some management of risk in an insurance pool.
The annual report of the South African ombudsman for short-term insurance says reasons for complaints were claims that had been declined by the insurer for vehicle insurance and home insurance claims. This was an indication that the payout ratio for these types of insurance isn’t so high in comparison to that of the life insurance industry.
According to published statistics by the South African Insurance Times and Investment News when it comes to South African Life Insurance companies in regards to their payout ratio they’ve paid billions to policyholders and beneficiaries.
The payouts were for people who had either lost a family member or had developed a disability. Also with South Africa experiencing price increases and workforce layoffs, many claimed their savings policies to help them get by. The increasing payout rate makes a far more reliable case for Life Insurance than personal tales of non-payment.
Some of top reasons for claims to be denied include suicide attempt, non-disclosure and fraud. Double-check that your provider has up-to-date information in a timely manner, because if the claim is filed too late with the correct insurer, it could be denied.