When purchasing an insurance policy or renewing an existing plan, it is vital to check and assess the insurance company’s current claim settlement ratio. While it is common to check only the policy premium and cover, individuals must pay attention to the claim settlement ratio to ensure their choice is good for them. Typically, the claim settlement ratio serves as an indicator that shows the insurer’s efficiency when it comes to settling its customers’ claims against the total number of claims they receive in a year. Notably, the Insurance Regulatory and Development Authority of India, which is the apex governing body for insurance, published the claim settlement ratio for registered insurance companies in its latest report.
Typically, the main purpose of an insurance plan is to provide financial protection to the dependent of the policyholder in case of the insured’s sudden demise, hospitalization, or diagnosis of critical illness. The claim settlement ratio typically plays an important role in assuring that the policyholder or their nominee will be able to access the desired insurance payout at the time of need.
For instance, a health insurance plan with a high claim settlement ratio indicates that the insurance company is adept at meeting its promised obligations to the insured and helps them effectively access the coverage amount in case of a medical emergency or diagnosis.
Definition of Claim Settlement Ratio
The claim settlement ratio can be defined as a metric that allows users to measure the total insurance claims received by the insurance company and the number of claims settled by them in a year.
As a standard, a high claim settlement ratio of 90% or higher reflects the insurer’s ability to successfully settle a large volume of insurance claims in a given period. This is why it is highly recommended to check an insurer’s previous and current claim settlement ratio before purchasing an insurance plan to understand where they stand in terms of settling the claims of their customers.
This information will enable one to make an informed decision and offer them peace of mind thinking that the policy dependents will gain access to the sum insured in case of a medical emergency and will be able to account for the expenses with ease.
What Does an Insurance Company’s Claim Paid Ratio Signify?
The ratio provides insurance policy buyers with a fair idea about the record of the insurer’s claim settlement history. The percentage offers an idea about the volume of claims it settled and the amount of money it disbursed in a given year. A higher claim settlement ratio suggests that insurance companies are likely to settle most claims and provide their customers with the promised sum.
In fact, the ratio suggests the commitment of the insurers towards their policyholders and their effectiveness in providing them with financial coverage in their time of need.
Alternatively, a low claim settlement ratio is likely to raise doubts in the mind of the policy buyer. This is because insurers with low ratios are perceived to have trouble settling claims or helping policyholders gain access to the promised sum in the face of an emergency.
A low ratio may either suggest that the insurer rejects insurance claims outrightly or downplays the claims by paying individuals a much lower amount than the promised sum.
This makes it crucial for individuals seeking insurance plans to check the claim settlement ratio of the policy provider in detail to understand their settlement record. They must compare the ratios of different insurers to gain a better understanding of their capabilities.
Besides these, individuals must check other crucial factors such as the claim settlement process, the duration of claim settlement, and key requisites for settling them to ensure a hassle-free experience. In addition, they need to find reviews about the company’s customer service to understand what to expect from them in case of need.
How Can You Check the Claim Settlement Ratio
The Insurance Regulatory and Development Authority publishes a report on India’s insurance industry every year. Notably, the said report features key information about the insurance industry and also highlights the performance of each insurer. Some of the key details the report features include –
- The total number of insurance policies sold in the year
- The total amount of insurance premiums received in the year
- The claim settlement ratio of the insurer in the year
Individuals can easily access this report and more on its analysis of the insurer’s information, their products, their best ULIP plans, exclusion, etc., on their website. They can access the details for free and gain valuable information that can help them track the insurer’s performance record and more.
What Guarantees That A Claim Will Be Settled?
Individuals must note that there is no certainty that their claim will get settled by the insurer. This is because a claim’s rate of success depends on multiple factors. The approval rate also depends on the information provided by the insured, their accuracy, and the required documents to support their claim. In addition, individuals should be transported and honest about the details they share with the insurer while getting the policy and when filing a claim as any discrepancy might lead to policy rejection.
While claim approval is not guaranteed, individuals must make it a point to find more information about the company and assess its claim settlement record, terms of settlement, and processing steps to ensure they pick a company that extends feasible clauses and is capable of meeting urgent requirements. It should be remembered that the primary focus of insurance is to provide protection to the insured or their beneficiary in case of emergency, and an insurer who is incapable of the same will defeat the purpose altogether. Hence, individuals must be prudent when selecting an insurer and take into account these aspects to pick one that can help them in their time of need.
Subsequently, individuals should check the key features and accompanying benefits of the insurance plan to understand its scope and limitations. They must pay special attention to the policy terms and clauses and check exclusions in detail to make an informed choice.
