Claim Settlement Ratio is the total number of claims settled by an insurer against the number of claims filed in a financial year. CSR demonstrates how reliable an insurer is when it comes to settling the claims of its customers. The higher the CSR is, the better it is considered.
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The primary purpose of buying a term insurance policy is to protect the life of dependent family members from potentially devastating financial losses that may occur if something happens to the policyholder. But what if your claim settlement is delayed? That would be another problem for your loved ones in tough times
The claim settlement ratios showcase the credibility of your insurer for settled claims. The claim settlement ratio is a percentage of claims throughout the financial year that the insurer has settled smoothly. Indeed, while choosing a reliable insurance provider or renewing your existing one, along with checking the premium amount, you must check the insurer's claim settlement ratio.
The claim settlement ratio is the total number of claims settled versus the total number of claims risen during the same financial year. The claim settlement ratio or (CSR) is applicable for all categories of insurance companies such as health, term, life, motor and much more.
The Insurance Regulatory and Development Authority of India (IRDAI) has set strict guidelines for insurance companies to release CSR data at the end of every financial year.
For instance, Assumed that the insurance company got 1000 death claims throughout the April 1, 2021, and March 31, 2022 financial year. The insurer has settled 940 claims successfully, 50 were rejected, and 10 are on hold.
Hence, the claim settlement ratio will be 940/1000=94%
The claim rejection ratio=50/1000=5%
The claim pending ratio=10/1000=1%
In the above case study, the insurance company excludes or does not accept the remaining claims of 5 percent. However, the insurer may sometimes reject a claim for several reasons, such as fraud, impersonation, misrepresentation, etc. Undoubtedly, an insurer's claim settlement ratio helps you determine the insurance provider's credibility or stability.
Policyholders can calculate the insurer company's claim settlement ratio hassle-free with the given formula-
Claim Settlement Ratio (CSR)=(Total number of claims settled in a year/ Total number of claims in a year) X 100
For instance, Company X settled 9,000 out of the 10,000 claims for 2021-2022. Its CSR will, thus, be 90% (9,000/10,000*100).
For calculating the CSR of the insurance companies, IRDAI use these two categories of claim settled:
We've listed the claim settlement ratio data in the IRDAI Annual Report for the 2021-22 financial year. However, CSR is the percentage of claims an insurer settles annually compared to the total number of claims received from nominees. Please note that all CSR-related details in this article are IRDAI-verified.
Insurance Providers | Claim Settlement Ratio (CSR) |
ICICI Prudential Life Insurance | 97.82% |
HDFC Life Insurance | 98.66% |
PNB Metlife India Insurance | 97.33% |
TATA AIA Life Insurance | 98.53% |
Bajaj Allianz Life Insurance | 99.02% |
Max Life Insurance | 99.34% |
Canara HSBC OBC Life Insurance | 98.44% |
Kotak Mahindra Life Insurance | 98.82% |
Edelweiss Tokio Life Insurance | 98.09% |
Aegon Life Insurance | 99.03% |
Claim settlement ratio plays a key role when selecting the insurer provider to buy a term life insurance plan. Based on the general rule of CSR, the higher the ratio, the more credible or reliable the insurer will be. Remember that the term claim settlement ratio is always measured in a percentage. However, the standardization was done by the IRDAI (Insurance Regulatory Development Authority of India). Here, we've listed the few benefits associated with Claim Settlement Ratio.
When it comes to the claim settlement ratio, there are certain factors that will impact the insurer's overall CSR. For example, if the claim process slows down, it'll affect the insurer's CSR.
When you don't disclose the information regarding your pre-existing health conditions to the insurer, you risk your policy cancellation or rejection of the claim. If the insurer knows about your pre-existing health conditions in the future, then you'll lose all your premiums and your source of financial support during your critical times. In this case, the company may reject your claim, but it also impacts its overall CSR.
Suppose the policyholders submit the wrong information to the claim to cheat the insurance company, and the insurer gets suspicious about the authenticity of the proposer's claim. In that case, the company will reject the claim, impacting its overall CSR.
One of the primary causes for claims being rejected is that policyholders fail to follow the terms & conditions of the company or make wrong disclosures of essential details. It would be best if you spent time and effort going through the policy's contents.
Sometimes, policyholders forget to fill the nomination column in the insurance proposal form. It'll surely cause a short delay in the claim process due to identifying the legal heir. To opt for a claim, the nominee must be present while settling the claim.
Claim Settlement Ratio (CSR) is an essential metric when it comes to selecting the best term insurance provider. It helps you give the peace of mind that your family members can get financial protection in a hassle-free or smooth claim process.
Policyholders can calculate the insurer company's claim settlement ratio hassle-free with the given formula- Incurred Claim Ratio=Net Claims Settled/Net Premium Collected.
Max Life Insurance has the highest claim settlement ratio in terms of the number of claims, with 99.34 percent.
A claim settlement ratio above 95% is considered good. If insurers have more than 95% CSR, the insurance provider is more reliable or credible.
ICR and CSR are two different terms. ICR equals the total value of all claims, and CSR is the total settled claims of the insurance provider.
To check the claim settlement ratio for term insurance plans, go to the official website of the IRDAI and navigate to the section of annual reports. In the latest annual report, you will find the section of ‘Incurred Claim Settlement Ratio for Life Insurers’.
Check and compare plans from 21 IRDAI-approved term insurance providers before purchasing a term plan.
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Sahil is a passionate content writer with over two years of expertise in the insurance domain. He uses his knowledge in the field to create engaging content that the customer can relate to and understand. His passion lies in simplifying insurance terminology, ensuring a hassle-free understanding for potential policyholders. With his outstanding collaborative efforts with people, he understands different perspectives and keeps readers' viewpoints at the forefront of his content writing approach.