Claim Settlement Ratio 49471 views March 13, 2020

Highest Claims Settlement Record: Is Your Insurance Provider on This List

The main reason for buying a life insurance plan is to ensure that in your absence, your nominee or your legal heir receives the sum insured as committed by the insurer. And they should not be facing a situation where the insurance company discards and rejects their claim. Thus, it is of utmost importance for you to recognize and understand the factor of the insured, as to which insurer has been maintaining a good healthy record of death claim settlements. The main thrust revolves around the fact that is you will pay all the premiums and in case of an unforeseen incident, the insurer is will pay the sum insured to your family. This expectation might get disrupted and may result in the highest disappointment and despair. Insurance companies that pay off a large number of death claims are considered as trustworthy and reliable companies with good expertise in their technical know-how. Hence, all these insurance companies have a substantial number of contented customers and have a high claim settlement ratio. Hence, when you are planning to buy any health plan, considering the claim settlement ratio is a must.

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What is the meaning of Claim Settlement Ratio?

Claim Settlement Ratio or generally known as CSR is the percentage of the number of claims paid to the clients by the insurer and the total claims received by the company. The formula used to attain the Claim Settlement Ratio is:

Claim Settlement Ratio = Total claims paid off by the insurer/ Total number of claims received by the insurer*100

What is the implication of the Claim Settlement Ratio to you, as a customer?

The ultimate aim of having an insurance policy is to give complete monetary guard to your dependents in your absence. Hence, Claim Settlement Ratio plays an important part in deciding the insurer. From you as a policyholder’s point of view, higher Claim Settlement means that the company is more reliable and therefore has the capability to settle more death claims. Let us take a simple example where Company A with a Claim Settlement Ratio is 90%. This fundamentally means that Company A can settle 90 death claims out of 100 claims which they have received.

Good insurance companies will ensure that their customers are buying the products knowing all the pros and cons thereby safeguarding the transparency and gaining more confidence of the customers. The company will also follow a robust underwriting technique of handling the risk. The more efficient the method of underwriting is, the better would be the client satisfaction and claims settlement ratio of the insurance establishment. A higher Claim Settlement Ratio brings in the self-assurance in any customer that the insurers will provide monetary security in case of any claims made.

Some Facts of Claims Settlement Ratio

General insurers both in private and public segments are in close competition with respect to the settlement of claims, as per the data published by the Insurance Brokers Association of India or IBAI.

PositionName of the Insurer- Public UndertakingsClaim Settlement Ratio as on 31st March 2018 (%)Claim Settlement Ratio as on 31st March 2019 (%)Number of claims
1New India93.0692.445459068
2Oriental Insurance87.6590.135633511
3National Insurance 72.5785.432531045
4United India Assurance75.6984.456652619
PositionName of the Insurer- Private SectorsClaim Settlement Ratio as on 31st March 2018 (%)Claim Settlement Ratio as on 31st March 2019 (%)Number of claims
1IFFCO Tokyo90.6992.66929589
2HDFC Ergo81.2590.322069142
3Bajaj Allianz85.7088.352789992
4Royal Sundaram87.1486.79467728
5TATA AIG84.5585.991083129
6Universal Sompo79.5982.58167241
7ICICI Lombard79.5579.981788734
8SBI General 72.2376.20283195
9Reliance 76.6774.961948028

The above table indicates that New India Assurance and IFFCO Tokyo are the topmost insurers for the fiscal year 2018-2019 with 92.44 % and 92.66 % respectively. pros and cons thereby safeguarding transparency and gaining more confidence in the customers. Amongst the public sector based general insurers, even with the number of claims are greater than INR 2 crores for the financial year 2018-2019, the claims settlement ratio was above 84 % for all the public-sector general insurers.

Let us now see a similar table for some health insurers as below.

PositionName of the Insurer- Private SectorsClaim Settlement Ratio as on 31st March 2018 (%)Claim Settlement Ratio as on 31st March 2019 (%)Number of claims
1Care Health89.5992.58700596
2Manipal Cigna84.9189.43153782
3Apollo Munich84.0884.10345967
4Niva Bupa88.0683.9294174
5Star Health79.3478.15815584
6Aditya Birla Health85.3472.8062306

From a health insurer standpoint, the above table shows that Care Health had a Clam Settlement Ratio of 92.58% for the fiscal year 2018-2019 which means that the company was able to settle claims to the tune of almost 93%. The industry average increased from 80.77% in the financial year 2017-2018 to 85.18% for the financial year 2018-102019.

The below table indicates that Private sectors displayed significant enhancement in the amount of paid benefit from 89.44 % for the financial year 2017-2018 to 91.32% in 2018-2019 and also in terms of the number of policies. On the other hand, LIC’s number of policies has lessened down from 98.04% to 97.79%.

 2017-2018 2018-2019 
Quantity of PoliciesAmount of BenefitQuantity of Policies NumberAmount of Benefit
Private Insurers95.24%89.44%96.64%91.32%
LIC98.04% 94.45% 97.79%95.32%
Industry Total97.68%93.07%97.64%94.26%

No matter what the type of insurance you choose, selecting a company with a high claim settlement ratio will always be beneficial to you and your family in the long run. So choose carefully and apply for any insurance policy as per your requirement.

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