Should You Consider the Claim Settlement Ratio of an Insurer?
The consideration for a policyholder is the insurer\'s capacity to keep their family safe in an unfortunate event
Life insurance is a contract between the policyholder and the insurance company, in which the insurer agrees to provide financial support to the insured person's nominees in case of an unfortunate event.
As someone looking to buy life insurance, the settlement of claims by insurance providers is one of the most significant concerns. It is understandable that policyholders face such difficulties when choosing the best insurance plan for their family's protection. It can be complicated because several insurance carriers offer a variety of benefits with different policies. However, considering statistics such as the insurer'sclaim settlement ratio might help you make a more informed decision.
In India, the 'claims settlement ratio' is a trustworthy metric that the insurance regulator provides in public disclosures. This ratio might help you assess whether a life insurer and an insurance policy are the best options for you.
Keeping that in mind, we have compiled a list of crucial facts concerning the term insurance claimsettlement ratio that you can use when securing your life!
How Does Claim Settlement Work?
An insurance provider's Claim Settlement Ratio (CSR) is the total number of claims they settle in comparison with the total number of claims they receive. It essentially quantifies their ability to successfully pay insurance claims.
Claim paid ratio is another name for it, and policyholders assess the insurer'sreliability with its help. Checking the insurer's claim settlement ratio before purchasing an insurance plan gives you an insight into their claim settlement history.
Financial security and stability under unforeseeable circumstances is a policy buyer's motive when they buy an insurance policy. Hence, choosing an insurer with a higher claim settlement ratio offers the policyholder improved confidence about their family's future security.
For FY 20-21, Max Life insurance tops the chart with 99.4% claims paid.*
| S.no. | Company | Claim Settlement Ratio |
| 1. | Max Life | 99.22% |
| 2. | HDFC Life | 99.07% |
| 3. | TATA AIA | 99.06% |
| 4. | Bajaj Allianz | 98.02% |
| 5. | ICICI Pru Life | 97.84% |
| 6. | PNB Metlife | 97.18% |
| 7. | SBI Life | 94.52% |
Source: IRDAI Annual Report 2019-2020
Why Should You Consider It?
Many policy buyers may overlook the claim settlement percentage when considering other crucial variables such as the plan's price and advantages. However, it can assist you in selecting the appropriate insurer and coverage.
A favourable claim settlement ratio encourages policyholders to select a specific insurer since it represents the following factors:
- Capability
A high term insurance claim settlement ratio indicates that an insurance company intends to approve claims. More importantly, it indicates their performance and capability to pay off the claims. Since the rejection of insurance claim is a significant concern, many policyholders have a negative perception of insurers.
However, checking the term insurance claims paid ratio before purchasing a policy might provide you with peace of mind. Doing so will let you can rest assured of their commitment and financial soundness.
A greater claim settlement ratio indicates that the corporation will be able to keep its word and that the claim will not be denied due to financial incompetence. It gives the policyholder a sense of security and helps them establish trust in the organisation, which is important when making financial decisions.
- Reliability
The consideration for a policyholder is the insurer's capacity to keep their family safe in an unfortunate event. The claim settlement ratio is a metric specifically addressing this capability. It aids in determining whether the insurer can be trusted with the financial security of their family.
When a claim is denied, an insurance policy becomes obsolete, undermining the point of purchasing it in the first place. As a policyholder, choosing an insurer with a high claim settlement ratio increases the likelihood of your claim being approved in the future.
Besides, a high term insurance claim settlement ratio indicates that the company has a strong insurance underwriting process. It is the process of determining a person's risk factor by evaluating their application to buy an insurance plan.
- Consistency
The term insurance claim settlement ratio of an insurance company over time reflects their constancy in paying claims. On the Insurance Regulatory and Development Authority of India (IRDAI) website, you can find the published claim settlement ratio of insurance carriers.
The regulatory authority makes the insurance claim settlement ratio data of all insurance providers available at the end of each financial year. You can also check the yearly report, which provides further information on claim rejection and settlement statistics.
Checking the claim settlement ratio for the last five years can be helpful when considering a specific insurance provider. This track record will offer you more confidence in entrusting your family's financial security to them.
It should be noted that an insurer's claim settlement ratio may be reduced as a result of fraudulent claims. Hence, consider these factors carefully when you choose an insurance plan for your family's future.
Disclaimer: No Deccan Chronicle journalist was involved in creating this content. The group also takes no responsibility for this content.