Highest claim settlement ratio in life insurance: How to check claim ratio

Claim settlement ratio is a crucial factor when it comes to determining which insurance company to opt for to purchase term insurance. To ensure one’s family has a smooth experience when raising and settling claims, it is recommended to look for insurers who have the best interest of policy buyers in their heart as evidenced by their high claim settlement ratio.

Insurance companies with the highest claim settlement ratio in life insurance are considered to be more reliable. This is because a high ratio serves as an indicator of the company’s credibility. Notably, a ratio over 90% is considered to be a good claim settlement ratio. Individuals can easily check this ratio on the official website of their preferred insurer or look for the same at the Insurance Regulatory and Development Authority of India (IRDAI) website.

How to check the claim settlement ratio?

By following these steps, individuals can easily find the claim settlement ratio of an insurance company –

  • IRDAI Report

The Insurance Regulatory and Development Authority of India releases a report every year highlighting the key market trends and performance of the insurance industry. The report also features the claim settlement ratio of different insurers in a given period, offering a clear idea of which insurance company stands where in terms of settling its customers’ claims. Individuals can easily access this report through the regulator’s website and make an informed choice when buying a life cover. 

  • IBAI Report

The Insurance Brokers Association of India shares an annual report on the insurance industry which also highlights the claim settlement ratio of different insurance companies active in India. Individuals may try to avail of a copy of the report from IBAI’s website and compare health insurance settlement ratios before selecting a particular insurer.

  • Insurer’s website 

Leading insurance companies also publish their current claim settlement on their official website. Individuals can easily check the claim settlement ratio of their preferred insurer by simply visiting their official website. 

Typically, a claim settlement ratio over 90% is deemed consumer-centric as it denotes that the insurance company has settled most of the claims it received in a year. 

Things to remember while checking the claim settlement ratio of an insurer

Just like individuals weigh in several factors before selecting a particular term insurance plan, they should factor in several things when checking an insurance company’s claim settlement ratio. Having an idea of the features, benefits, and claim settlement ratio, individuals will be able to analyze the merit of the policy and the efficiency of the policy provider and subsequently make an informed choice that’s in their interest.

The most important thing to remember when checking the claim settlement ratio is to make it a point to check and compare the ratio of at least the last 4-5 financial years. This will help understand whether the insurance company has been consistent in settling claims or not. 

Selecting an insurance company with an inconsistent claim settlement ratio could spell trouble as their report suggests that they have not been consistent when settling claims and their performance could vary when the insured or their beneficiary decides to raise a claim.

Look for insurance companies with the highest claim settlement ratio in life insurance preferably over 90%. Insurance claim settlements are often not guaranteed, in this situation selecting an insurance company whose claim settlement ratio is below par could add concerns. To remain at ease and ensure that their claim gets settled, given it meets the conditions, individuals must pick an insurer with a record of honoring claims.

Lastly, make sure to compare the claim settlement ratio of different insurance companies to understand which one is more likely to settle claims and has a better settlement record. 

Besides these, make sure to check the claim process, the requisites of raising a claim, and more importantly the window of getting a claim settled. This will help understand whether the insurance company follows a smooth and simple claim process or not and if the dependents would be able to seek timely assistance under their plan. This insight would be more crucial for individuals seeking health insurance or critical illness coverage as quick access to the promised sum will help them avail of required medical treatment.

How is the claim settlement ratio of an insurer calculated?

The claims settlement ratio for insurers is based on the volume of claims they have settled out of the number of claims they received in a year.

This is why a claim settlement ratio is computed using this simple formula 

Claim Settlement Ratio = 

(Total number of insurance claims settled in a given year/ Total number of insurance claims received in a year) X 100

Suppose, Insurance Company X has settled 9,500 claims out of 10,000 claims it received in the Financial Year of 2019-2020. Using the claim settlement ratio formula –

= (9,500/10,000*100)

= The claim settlement ratio of Insurance Company X will be 95%.

The ratio is a good number, suggesting that the insurer has settled a large volume of insurance claims within a given period. It also suggests that the company has been quick in settling the claim.

Why is an insurer’s claim settlement ratio deemed crucial?

The claim settlement ratio is crucial for more than one reason. To begin with, the ratio helps assure the future financial safety and security of one’s dependents. To elaborate, a higher ratio indicates an insurer is likely to settle insurance claims. This offers insured peace of mind and ensures that their family will be able to access the sum assured in case of an emergency and meet their financial needs.

Additionally, the claim settlement ratio highlights an insurance company’s reliability and ability to pay sums assured to the policy nominee. Those with a consistently high ratio are unlikely to default on claims.

However, individuals must make sure that they disclose all vital personal, financial, and health details to the insurance company at the time of purchasing a policy. Similarly, they should not misstate any vital information regarding health, age, or income. Being transparent and honest will help minimize the risk of getting future claims rejected on the grounds of nondisclosure or misstatements.