Highest claim settlement ratio in life insurance: Does it really matter?

Individuals mostly focus on the insurance premium and coverage when looking for a new policy and seldom think about checking the insurer’s record of settling claims. What they often miss is that checking the claim settlement ratio of the insurance company is the most crucial factor that one must find out before buying a policy from a certain insurance provider. This is because the ratio would decide the future of the insured’s claim and it would be settled. Since claim approval is not always guaranteed, individuals need to track the company’s past record to understand their mindset.

In fact, the claim settlement ratio serves as a report of an insurer’s track of settling claims in a year, allowing policy buyers to understand what to expect from the provider in case of an emergency. This is why having an idea of the claim settlement ratio of a company also plays a crucial role in ensuring the mental peace of the buyer.

Every year the Insurance Regulatory and Development Authority publishes a report on the insurance industry which also highlights the highest claim settlement ratio in life insurance for the particular year, along with how others have fared in the same. Individuals can access this data by referring to the IRDAI report or checking the same on the official website of the insurer to gain a better understanding.

To further understand what makes the claim settlement ratio so crucial. Let’s explore more about its role and importance in detail.

What is the Claim Settlement Ratio?

Claim settlement ratio which is also known as the claim paid ratio is basically a financial metric that shows the percentage of claims an insurance company settled in against the total number of claims it received.

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Typically, a higher claim settlement number over 90% is deemed favorable and indicates that the insurance company has a record of settling a major number of claims out of the total number of claims it receives. This is why companies with the highest claim settlement ratio in life insurance are deemed more policy buyer-friendly and efficient in handling claims.

The entire purpose of getting life insurance or health insurance is to ensure that the claimant is able to access financial assistance in the face of an emergency. Since a lot depends on the insurer’s ability to settle claims, it is vital to check this ratio and compare the ratio of different providers before purchasing a plan from any of them.

What Does the Ratio of Claim Settlement Suggest?

A claim settlement ratio serves as a record of an insurance company’s performance in terms of settling insurance claims of their policyholders. This is why a high ratio means that the insurance company has settled the majority of claims it received in a year. Notably, Insurance companies can only settle claims that meet their guidelines, fall under the policy coverage, and fit the clauses of the policy.  This way the ratio can also suggest how stringent the company is regarding its claim settlement. A high ratio also suggests that the insurance company is financially capable of resolving the claims of its policyholders. 

However, a low insurance claim settlement ratio means that the insurance provider has a track of rejecting a majority of the claims it receives or that it delays the claim process, which again creates a problem for the policy dependents in times of emergency. This way individuals should compare health insurance claim settlement ratio to estimate how easy or difficult it would be to get a claim approved from a certain insurer.

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To further ensure that individuals understand the scope of getting a claim settled they must check other parameters in advance. For instance, finding out the claim settlement process, duration, and requisites can help understand how smooth the process could go.

Is It Important to Check Claims Settlement Ratio?

It is crucial to check the claim settlement ratio in order to gauge the merit and scope of an insurance policy and the provider. 

This is because a high coverage amount, extensive coverage, and flexible payment options would not serve the purpose of offering robust financial protection if individuals are unable to access insurance coverage at the time of need. 

The only way to judge a provider’s approach to settling claims is by looking at their history and the most accurate way to do so is by checking the ratio.

In addition, a high claim settlement ratio shows that the insurance follows a customer-centric approach which is crucial in things in insurance protection. This further helps understand whether the insurance provider is reliable and has a strong risk management approach or not.

Alternatively, insurance companies with low claim settlement ratios may not be equipped to ensure smooth claim processing and might have a huge pile of disputed claims.

How Can You Check the Claim Settlement Ratio?

Each year, the regulatory body, Insurance Regulatory and Development Authority publishes a detailed report on India’s insurance industry and insurance companies. Such a report includes the total number of claims received in a year and the total number of claims it settled during the period. 

One can easily check the claim settlement ratio of their preferred insurance companies by checking the IRDAI’s report on the industry’s claim settlement record. Alternatively, individuals can visit the insurer’s website to check the claim settlement ratio. They may also ask insurance agents to offer insight into the insurance company’s claim settlement ratio.

In addition, individuals should check other vital details to pica useful term life insurance coverage. For instance, they should check if the insurer is known to pay the sum assured in full and within the specified time. 

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This information will help individuals not just pick the best provider but also ensure that they are better equipped to face any situation and build contingencies if need be. Such preparation will come in handy in securing the financial future of the dependents and will also allow them to become financially more aware and independent. Similarly, they must read the fine print related to insurance claims to understand the clauses and conditions better.