The claim settlement ratio of the insurer is a crucial aspect of the decision-making process when choosing an insurance product. The claim settlement ratio gives you an idea of the insurer’s track record in offering a seamless and hassle-free claim settlement process. Before proceeding to ways to check the claim settlement ratio, let us go through some of its basics in detail.
What is a claim settlement ratio?
Claim settlement ratio (CSR) is the percentage of claims that were settled in a financial year to the total number of claims that were raised during that period. It shows the credibility of the insurer. The higher the CSR, the higher the chances of your claim being settled without any hassles.
How is claim settlement ratio calculated?
The formula used in calculating CSR is given below:
CSR = (Total Claims Settled / Total Claims Received) × 100
For example, if an insurer receives 1,000 claims in a year and successfully settles 950, the CSR would be 95%. A high CSR signifies that the insurer has a strong track record of claim approvals, making them a reliable choice when a vehicle owner is planning to buy car insurance.
Documents required for claim settlement
To ensure a smooth claim settlement process, policyholders must submit the following documents:
- Copy of the comprehensive car insurance policy
- The FIR (if the vehicle was stolen or in case of an accident)
- Repair bills and original receipts
- Vehicle registration certificate (RC)
- Driving license
How to check the claim settlement ratio?
Insurance companies registered under the Insurance Regulatory and Development Authority of India (IRDAI) declare and publish their claim settlement ratio annually. To know the CSR of your preferred insurance company, just visit the IRDAI website or look for IRDA claim settlement ratio 2022 on a search engine. A claim settlement ratio is a percentage number. Are you wondering what it means?
Let us explain the claim settlement ratio with an example. Suppose you want to know the credibility of an insurance company and the IRDA claim settlement ratio 2022 of that particular insurance company is 94%—a percentage figure. This means, in the last financial year, the company settled 94% of the total claims that were raised throughout the year. Simply put, for every 100 claims made by the policyholders, 94 were settled successfully. The number also indicates that the remaining 6 claims that were raised were either rejected, repudiated, or are pending. The claim could have been rejected due to one or more reasons such as fake claims, dissatisfactory paperwork, or insufficient information to prove the authenticity of the claim.
Points to keep in mind while checking the claim settlement ratio
Now that you know how to check the claim settlement ratio, be aware of some additional points that you must factor in while checking the ratio:
- Check the IRDAI details: The IRDAI claim settlement ratio is an extremely important and reliable indicator of the claim performance of an insurance company.
- Compare CSRs: As you know how to check and comprehend the claim settlement ratio of an insurance company, make the best of it when shortlisting insurance providers for your policy.
- Claim amount: Besides checking the claim settlement ratio, check the amount of the claim settled. It is quite possible that by the virtue of “number of policies” an insurance company has a higher CSR, but the “total amount” of the claim settlement is relatively low or non-competitive. This can happen when the company settles more claims with a lower sum insured and rejects high claim amounts.
- Financial performance: This is an extension of the previous point. Along with the CSR and the claim amount, it is important to check the financial health of the company. If a company is not doing well financially, then there are higher chances of you missing out on your insurance benefits in a time of need.
Conclusion
The Claim Settlement Ratio is an essential factor in determining the reliability of an insurance provider, whether you are purchasing a health plan or car insurance. By understanding how to check and analyse the CSR, policyholders can make informed decisions and ensure smooth claim settlements in times of need. Always research well before choosing an insurer to secure a hassle-free experience in the future.
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