Many insurance buyers, especially the new ones, may find themselves puzzled when having to decide which insurance provider is the best match for them. If you have found yourself in such a situation or may expect to in the future, you may like to know that these decisions can be taken after a thorough evaluation of a set of relevant parameters. One of these parameters is the claim settlement ratio. Understanding the claim settlement ratio (CSR) is crucial when selecting a life insurance plan.
This ratio is considered to be a key indicator of the reliability and customer-centric nature of an insurance provider. Knowing what the claim settlement ratio means can help you understand how it can play an important role in helping you decide on which insurance provider is right for you. This would be crucial for a range of plans you could buy under the umbrella of life insurance, including child plans and retirement plans in India.
What is the Claim Settlement Ratio?
It is a value that reflects how successful has the insurer been at settling the claims it has received in the past year. Generally, the higher the number of claims successfully settled, the better the customer satisfaction is believed to be. Hence, it is considered ideal to choose an insurance provider with a higher claim settlement ratio.
Many insurance companies may declare their claim settlement ratio, and you may easily find these values on the internet. However, it is important to understand how these values are calculated, if you are to make an informed decision as a prospective customer.
Formula for claim settlement ratio:
Claim Settlement Ratio=Number of claims setttledNumber of claims received×100
For example, if the company has received 1000 claims during the year, and has successfully settled 940 of them, the claim settlement ratio would be calculated as follows:
9401000×100=94
The claim settlement ratio, as a value, is expressed as a percentage. Hence, in this case, the claim settlement ratio would be 94%.
Importance of Claim Settlement Ratio
While you may now know how the claim settlement ratio of the insurance provider is significant to you, let’s look at a few more reasons why it is important.
A high CSR indicates the insurance company is reliable and has a track record of honouring claims. This builds trust among policyholders.
Knowing that an insurer has a high claim settlement ratio can provide peace of mind to policyholders, ensuring their beneficiaries will receive the intended benefits without undue hassle.
Insurance companies with high CSRs often meet or exceed regulatory standards, suggesting robust financial health and efficient operations.
Factors Influencing Claim Settlement Ratio
Several factors can influence an insurance company's claim settlement ratio:
Claim Verification Process
A streamlined and transparent verification process can lead to a higher CSR value.
Companies with strong financial health are better positioned to settle claims promptly.
Efficient customer service ensures policyholders’ claims are handled quickly and with minimal complications.
Adherence to regulatory requirements and guidelines also plays a crucial role in maintaining a high CSR value.
Incurred Claim Ratio vs Claim Settlement Ratio
You may also come across the incurred claim ratio of life insurance when understanding more about a company. It is necessary to remember that both these values differ from each other.
The incurred claim ratio (ICR) measures the total claims paid by the insurer relative to the total premiums collected, indicating the insurer's financial health and efficiency in managing funds. In contrast, the CSR focuses on the number of claims settled versus the number received, reflecting the insurer's reliability and commitment to policyholders.
While claim settlement ratio may not be the most concrete measure of how much trust you should place in an insurance company, it can certainly help you build a more realistic idea of where a particular insurance provider stands. Remember that it is necessary to consider many other factors when considering which insurer is right for you.
For instance, it is also important to understand what returns you can expect from the plan you choose for the premium you pay into it, as well as other customisations you opt for. An online life insurance calculator can help you draw these estimates in a hassle-free manner.
The claim settlement ratio is a vital metric when evaluating life insurance providers. It reflects the insurer's reliability and customer-centric approach, ensuring policyholders can trust their claims will be honoured. When selecting a life insurance policy, consider the highest claim settlement ratio in life insurance to maximise peace of mind and financial security.
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.
Ref. No.: __
BEWARE OF SPURIOUS/ FRAUD PHONE CALLS!
|
IRDAI is not involved in activities like selling insurance policies, announcing bonus or Investment of premiums. Public receiving such phone calls are requested to lodge a police complaint.
|
Customers 
Distributor 
Employee 
