What Is Good Settlement Ratio
The Claim Settlement Ratio denotes the percentage of claims that an insurer has paid vis-à-vis the total claims made on it in a financial year. For instance, if an insurance company receives 100 claims and settles 90 of them, the Claim Settlement Ratio would be 90%.
A good Claim Settlement Ratio is one that is as close to 100% as possible. This would mean that the insurance company has settled most of the claims that were presented on it. This would indicate a quicker claim settlement process which would foster trust in the insurance company.
Why Is Claim Settlement Ratio Important
The Claim Settlement Ratio is an important parameter when comparing insurance companies. Here are some reasons why1 –
1. Fosters trust in insurance company
A company attains a high Claim Settlement Ratio by settling its claims. This shows that the company is reliable in times of claim and increases the claim settlement probability for policyholders. This fosters trust among policyholders.
2. Promotes transparency
The Claim Settlement Ratio is published every year. This gives transparency to policyholders as they can review the claim settlement history of insurance companies and choose the right company.
3. Shows credibility
An insurance company maintaining a consistently high Claim Settlement Ratio is seen as a credible company which honours most of its claims. This also increases the reputation and goodwill of the company and can make it a preferred choice among customers.
4. Shows customer-first approach
A company having a high Claim Settlement Ratio can be seen as one that keeps its customers first which is why it settles their claims easily. This makes prospective policyholders more likely to choose the insurer over others.
How Is the Term Insurance Claim Settlement Ratio Calculated?
The term insurance claim settlement ratioopens in a new tab is calculated using a simple formula as follows –
Claim Settlement Ratio (CSR) = (total number of claims paid in a given year / total number of claims raised in the year) X 100
For instance, in a financial year, if 100 claims are raised on the insurance company out of which the company has paid 95 claims, the term plan claim settlement ratio would be calculated as – (95 / 100) X 100 = 95%
Documents Required
Some of the documents required for death claims are as follows –
- The original policy document
- Attested copy of the death certificate issued by the local authorities
- The claim form, filled and signed
- An NEFT Mandate form is signed by bank authorities for direct transfer of death claim. Else, the claimant can also submit a copy of the cancelled cheque or bank passbook
- A photo identity and address proof of the nominee is also required like the Aadhaar Card, passport, voter’s ID card, etc.
In the case of medical or natural death, the following additional documents would be required –
- Copy of the medical records of the insured like the discharge summary, admission notes, etc.
- Statement from the attending physician in the form issued by the insurance company
- Employer’s certificate, if applicable
In the case of accidental deaths, the following additional documents would be required–
- Police FIR, panchnama or police complaint
- Post mortem report
- Final police investigation report, if any
Please note, that the list of documents required may differ from insurer to insurer. Please check with your insurer for more details.
Claim Settlement Process
The claim settlement process of a death claim under a term insurance planopens in a new tab is as follows –
| Step | Description |
|---|
| 1. Report the Claim | In case of an unfortunate event, covered under the policy, the nominee or any other claimant should inform the insurance company of the same. This is called reporting the claim. |
| 2. Fill the Claim Form | To inform the insurance company, the claimant should fill out and submit the claim form. The form is usually available on the insurer’s website and also at the branch office. |
| 3. Attach Required Documents | The claim form should be attached with a set of relevant documents. |
| 4. Document Verification | Once the form is submitted, the insurance company reviews the claims and verifies the documents. If any document is missing, the insurer sends a notice to submit the missing document within the specified time. |
| 5. Decision on the Claim | Once the documents are verified, the claim is settled or rejected. In the case of claim rejection, the insurance company cites the reason for rejection. |
| 6. Return of Premium on Maturity | In the case of the return of premium term insurance plansopens in a new tab, the insurance company usually sends a discharge voucher before the maturity date. You have to fill out the voucher and send it to the insurer for a refund of the premium on maturity. |
Factor Influencing Claim Settlement Ratio Plain
Some of the factors that may affect the Claim Settlement Ratio of insurance companies are as follows2
Underwriting practices
Insurance companies that follow strict underwriting practices issue the policy knowing the expected risks. This reduces the chances of fraud and claims are settled easily. The correctness of claim settlements means a higher Claim Settlement Ratio by reducing the likelihood of future fraudulent claims³.
Claim process
Insurance companies having a simple claim process settle their claims quickly. This is because policyholders have to follow simple steps for claim settlement and their payout may be credited quickly.
Customer service
Insurance companies with a dedicated customer care platform to handle claim-related queries can settle claims quickly. Open communication could lead to a better customer experience and could favourably impact Claim Settlement Ratio³.
-Calculator.svg)
