Vikas is a young professional who works as a junior accountant in a Tier 2 city in India. His family, which includes his parents and two minor siblings, resides in the hinterlands. As soon as he got a job, Vikas purchased a term life insurance plan to get coverage for himself and protection for his family, who is financially dependent on him.
Being a diligent person, Vikas spent quite a bit of time researching term insurance and understanding which policy may suit him. He also checked estimates using a term insurance calculator. When doing so, he was concerned not only about the type of policy he was choosing but also the insurance provider offering this policy. For it is the insurance provider and their overall standing that will determine how his loved ones may be able to claim the benefits of the policy in his absence.
One of the most important factors Vikas considered when choosing an insurance provider was the claim settlement ratio. He knew that it is considered ideal to choose an insurer who has a higher claim settlement ratio. But what is a claim settlement ratio for term insurance or life insurance companies and why should this number be high? Is it the ultimate deciding factor when it comes to choosing the right insurer? Let’s find out.
What is Claim Settlement Ratio and Why is it Important?
For all life insurance policy providers, including term plans, claim settlement ratio is a term that you would often come across when talking about choosing an insurance provider. Knowing what this value represents can prove to be quite important for prospective as well as existing policyholders.
Claim settlement ratio is a value representing the success of an insurer in settling claims successfully over the past year. It is a percentage value calculated for the number of claims received over the past year.
How is Claim Settlement Ratio Calculated?
A reputed insurance provider in India is likely to be transparent about their claim settlement ratio. Customers could easily look at these details if they access the website or app of the company.
However, it is quite essential for customers to also know how this number is calculated. You need two details to successfully calculate the claim settlement ratio. They are:
Here is how you can calculate the claim settlement ratio using these two factors –
Claim Settlement Ratio=Number of claims setttledNumber of claims received×100
This would lead you to a percentage value, which is representative of the rate of successful claim settlement by the insurer in the year considered.
Why Does a High Claim Settlement Ratio Matter?
A high CSR indicates the insurer honours a large proportion of claims, reflecting their commitment to customer satisfaction and trustworthiness. It is one of the critical factors to consider when choosing an insurance provider. It serves as an indicator of the insurer’s reliability and efficiency in handling claims. Here are some of the reasons why claim settlement ratio is an important metric.
One of the primary reasons a high CSR matters is that it builds trust. Policyholders need assurance that their claims will be settled promptly and fairly, especially during challenging times. An insurer with a high CSR has demonstrated their capability and willingness to fulfil their promises, making them a reliable choice for policyholders.
Financial Security for Policyholders
Insurance is often purchased to provide financial protection against unforeseen events. Whether it's life insurance or any other type, the fundamental goal is to ensure the policyholder or their beneficiaries receive the necessary financial support when needed. A high CSR ensures the insurer is dependable in delivering this support, providing peace of mind to policyholders that their investment in insurance will pay off when required.
Competitive Advantage for Insurers
For insurance companies, maintaining a high claim settlement ratio can be a significant competitive advantage. It enhances their reputation in the market and attracts more customers. In a competitive industry, insurers with a high CSR are more likely to be chosen by informed customers. This, in turn, can lead to business growth and market dominance.
Customer Satisfaction and Retention
Customer satisfaction is closely linked to how well an insurer handles claims. A high claim settlement ratio for a term insurance provider usually translates to positive customer experiences, leading to higher customer retention rates. Satisfied policyholders are more likely to recommend the insurer to others as well as trust the insurer for any future policy needs, creating a loyal customer base. This loyalty is vital for the long-term success of any insurance company.
A high claim settlement ratio for a term insurance provider company is a crucial factor in the insurance industry, benefiting both policyholders and insurers. It builds trust, ensures financial security, offers a competitive edge, and contributes to customer satisfaction and retention. When choosing an insurance provider, evaluating their CSR can provide valuable insights into their reliability and efficiency, helping you make an informed decision.
Disclaimers:
Disclaimers: IndiaFirst Life Insurance Company Limited, IRDAI Regn No.143, CIN: U66010MH2008PLC183679, Address: 12th & 13th floor, North Tower, Building 4, Nesco IT Park, Nesco Centre, Western Express Highway, Goregaon (East), Mumbai – 400 063. Toll free No – 18002098700. Email id: customer.first@indiafirstlife.com, Website: www.indiafirstlife.com. Fax No.: +912268570600. IndiaFirst Life Insurance Company Limited is only the name of the Life Insurance Company and ________________ UIN ____________ is only the name of the Life Insurance Product and does not in any way indicate the quality of the contract, its future prospects, or returns. For more details on risk factors and terms and conditions, please read the sales brochure carefully before concluding the sale. Trade logo displayed above belongs to our promoter M/s Bank of Baroda and is used by IndiaFirst Life Insurance Co. Ltd under License. Advt.
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