When purchasing or renewing a term insurance plan, it’s vital to scrutinize the insurance providers’ claim settlement ratio (CSR) alongside the insurance premium amount and suitable coverage. The CSR typically represents the total percentage of claims settled by the provider against the total number of insurance claims they received in a given financial year. Notably, IRDAI, the regulatory body for all insurance policies in the country, publishes the actual CSR data for all registered life insurance providers in its annual report. The primary purpose of a life insurance plan is to financially protect the dependents in the event of the insured untimely demise, the claim settlement ratio plays an important role in getting the right kind of policy.
What is Claim Paid Ratio?
The claim settlement ratio (CSR), popularly known as the claim paid ratio, is the proportion of total insurance claims settled by an insurance company in a year. Typically, a high claim settlement ratio, say around and above 90%, indicates that the policy provider has resolved a high volume of the insurance claims they received in a year. This makes it crucial for individuals to check the ratio when renewing or purchasing an insurance plan. Checking the ratio is as important as checking the insurance premium, coverage, and exclusions.
What does Claim Paid Ratio Indicate?
A report by the Insurance Regulatory and Development Authority of India or IRDAI shared claim settlement details of the total life insurance providers for 2021-2022. The report says, there has been a notable rise in the death claim settlement record than the pandemic year. For instance, the individual claim settlement ratio for life insurance jumped to 98.64% in 2021-2022 from the previous year’s 98.39%. The claim paid ratio by amount reflects the percentage of claim value received by the insurance provider which would be been paid out. As discussed, a high ratio suggests the insurance company is paying a large percentage of the claims they receive. On the other hand, the low ratio suggests the insurance company has a reputation for rejecting or delaying many claims. Typically, the claim paid ratio is expressed in numbers, and the claim paid ratio amount helps measure the financial performance of an insurance provider. This ratio helps individuals understand how easy could it be for them to file for insurance and get it settled by the provider. Similarly, the claim paid ratio by amount might interest those individuals, who are interested in knowing the amount of money they could expect to receive on settlement. Besides the ratio, individuals are encouraged to check indicators like average length of claim settlements, customer service for claim settlement, and process in detail. This will help them make a more informed decision and plan their policy purchase accordingly.
What Makes Claims Paid Ratio Crucial?
Typically, a high claim paid ratio suggests the insurance company is committed to its customers. In addition, the claim paid ratio shows that the insurance company is reliable and has a strong risk management capacity. Checking the ratio before purchasing a policy from an insurer offers a sense of confidence that their claim will be successful and their needs will be met in the future, particularly at the right time.
The fact that claim settlement ratio details are available on the official website of insurance companies. Individuals can easily compare the policy features and insurance providers’ claim ratio to understand their merit and how effective they would be in meeting their insurance requirements. This information will help them plan their finances and their contingencies better.
It is often believed that insurance providers with a record of low claim ratio do not necessarily honor the claim processing of their customers and have many disputes. This is why, it is widely suggested to choose an insurance provider with a high ratio to be at ease that their family wout get the promised sum assured in their absence and avail of the required financial assistance when they need the most.
How to Check the Claim Paid Ratio
Notably, the Insurance Regulatory and Development Authority publishes a report on the Indian insurance industry yearly. The said report features various information including the performance of the insurers and other crucial details like –
- Total number of insurance policies sold in a year
- The total premium amount received in a policy year
- The claim settlement ratio of the last year
This report is typically shared on the insurance company’s website. Individuals can easily access the details and more by visiting their trusted insurance company website and looking for the report. Subsequently, they can access the report and check key details online.
That said, individuals typically purchase a life insurance policy to build a financial safety net for their family members. However, simply buying insurance does not guarantee that their family will be able to access the promised sum during an emergency. In other words, the claim might not get settled after all. This is why it is vital to do proper research about the insurance provider to know its record of settling claims, paying the sum assured on time, and keeping the processing quick and simple.
These factors make it crucial for individuals to check the insurance claim settlement ratio. In other words, individuals must check features like life cover, sum assured, premium amount, exclusion, claim process, and claim settlement ratio before getting an insurance policy. Having an idea about these details will help them understand which insurance, and which provider is suitable for them and their needs. This will help them ensure that their family members will be financially safe and independent in the insured’s absence and will be able to meet their current and future obligations with much ease.
They can use tools like an insurance calculator to determine what premium amount will be paid by them. In addition, they can find out what coverage would be enough for their needs and their requirements so that they can plan their future and secure their family’s financial position with much ease.