Cheat sheet
- LIC handles 84% of all death claims by count but only 62% by amount. Private insurers handle fewer claims but each one is worth 3.2x more on average.
- Private insurers now have a higher CSR by count (99.17%) than LIC (98.15%) as of FY 2024-25. This flipped in FY 2023-24 after decades of LIC dominance.
- By amount, they’ve converged to virtual parity: LIC 97.19%, private 97.18%. The 5-percentage-point gap from FY 2020-21 is gone.
- The average LIC death claim pays ₹2.45 lakh. The average private insurer claim pays ₹7.88 lakh. Different customer base, not different quality.
- LIC sells 94% through agents. Private insurers sell 50% through banks. These are fundamentally different distribution models, and that shapes who buys what.
- All data from IRDAI Handbook on Indian Insurance Statistics (FY 2020-21 to 2024-25) and IRDAI Annual Report 2024-25.
Average LIC Death Claim
FY 2024-25
Up from ₹1.96 lakh in 2020-21
Average Private Sector Claim
FY 2024-25
Up from ₹5.43 lakh in 2020-21
Private-to-LIC Claim Multiple
FY 2024-25
Down from 3.5x in 2021-22
IRDAI Handbook on Indian Insurance Statistics, FY 2020-21 to 2024-25 editions. Average = Amount Paid / Policies Paid.
“Should I go with LIC or a private insurer?” It’s the most common question in Indian life insurance. And the usual answers are useless. LIC loyalists say “trust” and “government backing.” Private insurer fans say “better service” and “higher CSR.” Both sides cherry-pick whichever metric supports their argument.
Here’s what 5 years of IRDAI data across claims, persistency, grievances, solvency, and distribution channels actually shows: LIC and private insurers serve fundamentally different customer populations. Comparing them on a single metric is misleading. The real question isn’t “which is better?” It’s “which is better for you, given your situation?”
Claims: LIC processes 5x more, private pays 3x more per claim
| Metric | LIC | Private (All) | Gap |
|---|---|---|---|
| Claims paid, FY 2024-25 (count) | 8,48,145 | 1,63,735 | LIC handles 5.2x more |
| Claims paid, FY 2024-25 (₹ crore) | 20,793 | 12,903 | LIC pays 1.6x more total |
| Average claim size, FY 2024-25 | ₹2.45 lakh | ₹7.88 lakh | Private pays 3.2x per claim |
| CSR by count, FY 2024-25 | 98.15% | 99.17% | Private leads by 1.02pp |
| CSR by amount, FY 2024-25 | 97.19% | 97.18% | Virtual parity |
| Denials, FY 2024-25 (count) | 15,964 | 1,369 | LIC denies 11.7x more claims |
| Denials, FY 2024-25 (₹ crore) | 602 | 375 | LIC denies 1.6x more by value |
IRDAI Handbook on Indian Insurance Statistics, FY 2024-25 edition. Private = aggregate of all non-LIC insurers.
The numbers look contradictory until you understand the customer base. LIC’s portfolio is dominated by traditional endowment and whole-life policies with sum assured amounts of ₹2-5 lakh. These are sold by agents in small towns and rural areas to middle and lower-income families. Private insurers sell more term insurance, with sum assured amounts of ₹25 lakh to ₹2 crore, primarily through bank branches and online channels to urban, salaried professionals.
When LIC denies 15,964 claims (9,137 repudiated + 6,827 rejected), the average denied amount is ₹3.8 lakh. When private insurers deny 1,369 claims, the average is ₹27.4 lakh. The stakes per rejection are very different.
What this means for you
If you’re buying a term plan for ₹50 lakh or more, the amount-based CSR matters more to you than the count-based one. Both LIC and private are at 97.2% by amount now. Your choice should be driven by plan features, premium, and rider options, not by which side has a marginally higher CSR.
The CSR flip: private insurers overtook LIC in 2023-24
99.00%
97.98%
98.15%
99.17%
IRDAI Handbook on Indian Insurance Statistics. CSR = Paid / (Paid + Repudiated + Rejected) by count.
For decades, LIC had the higher CSR by count. That changed in FY 2023-24, when the private sector aggregate hit 99.00% against LIC’s 98.24%. The gap widened in FY 2024-25 (99.17% vs 98.15%). What happened?
Private insurer repudiations dropped sharply: from 2,844 policies in FY 2022-23 to 1,369 in FY 2024-25, a 52% decline. LIC’s repudiations went the other direction: from 12,329 to 15,964 over the same period, a 29% increase. The post-COVID non-disclosure investigation wave hit LIC harder because of their sheer volume. More policies sold during the pandemic means more policies entering the investigation window now.
By amount, the story is even more dramatic. In FY 2020-21, LIC led by 5.83 percentage points (98.49% vs 92.66%). By FY 2024-25, the gap is 0.01 points (97.19% vs 97.18%). They’ve converged to parity.
What this means for you
The “LIC pays more claims” argument no longer holds. By count, private insurers now lead. By amount, they’re equal. If you’re choosing between LIC and a private insurer, CSR is no longer a differentiator either way.
Persistency: LIC loses more policyholders early, keeps them longer
| Duration | LIC | Private Avg | Who leads |
|---|---|---|---|
| 13th month | 64.12% | 76.31% | Private by 12.2pp |
| 25th month | 59.32% | 63.25% | Private by 3.9pp |
| 37th month | 52.66% | 58.75% | Private by 6.1pp |
| 49th month | 48.79% | 53.15% | Private by 4.4pp |
| 61st month | 50.31% | 47.07% | LIC by 3.2pp |
IRDAI Handbook on Indian Insurance Statistics, FY 2024-25 edition. Private average is simple (unweighted) average across all private insurers with data.
LIC’s 13th-month persistency is 64.12%. That means 36 out of 100 LIC policyholders don’t even renew after the first year. The private sector average is 76.31% at the same point. That’s a 12-percentage-point gap, and it’s been consistent.
But something interesting happens at the 61st month. LIC flips to the lead: 50.31% vs 47.07%. The policyholders who stay with LIC through the first couple of years tend to be stickier over the long term. The ones who drop off early were likely sold policies they didn’t fully understand or couldn’t afford; once that group churns out, the remaining base is loyal.
What this means for you
If you’re considering an LIC policy, make sure you can commit to the premium for at least 5 years. LIC’s first-year dropout rate is high, and lapsing means you lose both protection and the premiums you paid. With private insurers, the first-year renewal is more likely, partly because bank-sold policies have auto-debit built in.
How they sell: agents vs banks
LIC is an agent-driven company. 93.86% of individual new business comes through agents. Private insurers get 49.66% through bank branches (bancassurance) and 17.09% through direct sales. The online channel accounts for just 1.07% of private sector business and 0.53% of LIC’s.
This distribution model explains many of the differences. LIC agents sell in smaller towns, to families with lower incomes, using traditional endowment and money-back products. Bank branches sell term plans and ULIPs to salaried urban customers who walk in for a home loan and walk out with an insurance policy attached.
Industry total, FY 2024-25
IRDAI Annual Report 2024-25, Table II.10.
What this means for you
Where you buy matters less than what you buy. An LIC agent, a bank relationship manager, or an online platform can all sell you the right policy. The risk is mis-selling: being pushed into an expensive endowment when you need a cheap term plan. Compare products, not channels.
Solvency and grievances: the remaining gaps
LIC’s solvency ratio has improved from 1.76 (March 2021) to 2.19 (December 2025), partly driven by the 2022 IPO recapitalisation. The private sector average is 2.26. Both are comfortably above the 1.50 minimum. Neither LIC nor any major private insurer is at financial risk.
On grievances, LIC reported 74,104 complaints in FY 2024-25 against the private sector’s 46,325. That looks bad for LIC until you note they handle 5.2x as many claims. Per claim, LIC actually generates fewer grievances. And LIC resolved 100% of grievances with zero closing balance, while the private sector carried 554 unresolved at year-end.
The bottom line
LIC and private insurers don’t compete for the same customer. LIC covers India’s mass market through a massive agent network, with smaller policies and lower average claims. Private insurers serve urban, higher-income buyers through banks and direct channels, with bigger policies and higher stakes per claim.
On the metrics that matter for your decision (CSR by amount, solvency, grievance resolution), they’ve converged. Your choice should depend on your specific needs: what coverage amount you need, what premium fits your budget, which riders are available, and whether you want to buy through an agent, a bank, or online. Not on which side of the LIC-vs-private debate you fall on.
Compare specific plans using our premium calculator, and check insurer-level data on the Insurer Scorecard.
Frequently asked questions
Is LIC better than private insurers for term insurance?
Neither is categorically better. As of FY 2024-25, private insurers have a higher CSR by count (99.17% vs LIC’s 98.15%), while CSR by amount is virtually identical (97.18% vs 97.19%). LIC’s average claim is ₹2.45 lakh vs ₹7.88 lakh for private insurers. The gap is about different customer bases, not different claim-paying ability. Compare specific plans on premium, riders, and claim process rather than choosing by insurer type (source: IRDAI Handbook FY 2024-25).
Why is LIC’s average claim so much lower than private insurers?
LIC’s portfolio is dominated by traditional endowment and whole-life policies sold through agents in smaller towns, with sum assured amounts of ₹2-5 lakh. Private insurers sell more term insurance with higher sum assured (₹25 lakh to ₹2 crore) to urban, salaried buyers. The 3.2x gap in average claim size (₹2.45 lakh vs ₹7.88 lakh) reflects this difference in customer demographics, not claim quality (source: IRDAI Handbook FY 2024-25).
Does LIC have a higher claim settlement ratio than private companies?
Not anymore. Private insurers overtook LIC on CSR by count in FY 2023-24 (99.00% vs 98.24%) and the gap widened in FY 2024-25 (99.17% vs 98.15%). By amount, they’re at parity (97.18% private vs 97.19% LIC). LIC’s repudiation count has been rising (from 12,329 in FY 2022-23 to 15,964 in FY 2024-25), while private insurer repudiations dropped 52% over the same period (source: IRDAI Handbook).
Why do so many LIC policyholders lapse in the first year?
LIC’s 13th-month persistency is 64.12%, meaning 36% of buyers don’t renew after the first year. This is likely driven by agent-sold policies in semi-urban and rural areas where customers may not fully understand the product or cannot sustain the premium. Private insurers (76.31% at 13th month) benefit from bancassurance auto-debit mechanisms and urban customers with steadier incomes (source: IRDAI Handbook FY 2024-25).
Is LIC financially safe?
Yes. LIC’s solvency ratio is 2.19 as of December 2025, comfortably above the 1.50 minimum required by IRDAI. It has improved steadily from 1.76 in March 2021, partly due to the 2022 IPO recapitalisation. The private sector average is 2.26. No major life insurer in India, public or private, is near the solvency floor (source: IRDAI Handbook FY 2024-25).
Compare all 22 insurers side by side: The Gyansurance Insurer Scorecard shows claims, persistency, solvency, and ombudsman data in one view. No composite score, just the data.
Related data stories
Methodology
Data sources: IRDAI Handbook on Indian Insurance Statistics (FY 2020-21 to 2024-25 editions) for claims, persistency, grievances, and solvency. IRDAI Annual Report 2024-25 for distribution channel data.
Private sector aggregate: All non-LIC life insurers combined. CSR and claims figures are arithmetic sums. Persistency is a simple (unweighted) average across all private insurers with data; a policy-weighted average would differ.
Average claim size: Calculated as Total Amount Paid / Total Policies Paid. This is an arithmetic mean; the median claim size would be lower, particularly for LIC’s large volume of small-sum-assured policies.
Scope: Individual death claims only (Table 15).
Note on CSR formula: All CSR figures on this site use the IRDAI Handbook methodology: Claims Paid ÷ (Claims Paid + Claims Repudiated + Claims Rejected). Some external sources exclude rejected claims from the denominator, which produces higher CSR figures. For most private insurers, rejected claims are zero, so both formulas give the same result. The difference is most visible for LIC, which reports a separate “rejected” category. Group claims, maturity claims, and survival benefits are excluded.