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How to Calculate Insurance Claim Settlement?

The CSR of an insurance company serves as an indicator of the overall financial health and credibility of the company.

  • 20 Jan 2023
  • 2 min read


A claim settlement ratio or CSR is a percentage figure showing how many insurance claims were settled by an insurance company compared to the total number of claims raised by the policyholders during a financial year.

Calculation of the claim settlement ratio (CSR)

The claim settlement ratio of an insurance company is calculated using the following formula:

CSR = (Total number of claims settled in a year) / (Total number of claims in a year) x 100

The CSR of an insurance company serves as an indicator of the overall financial health and credibility of the company. The higher the claim settlement ratio, the higher the chances of your claim being settled smoothly.

Every year, the Insurance Regulatory and Development Authority (IRDA) publishes the claim settlement ratio of all the registered insurance providers. You can easily check the credibility of an insurance company by going through the list of IRDA Claim Settlement Ratio 2022.

Calculation of actual claim amount

While CSR reflects your chances of getting your claim settled without effort, it also speaks volumes about an insurance company’s financial credibility and customer-centricity. In addition, as a policyholder, you must know how your claim amount is actually calculated. For this, you must understand the extent of your coverage, especially if you are a businessperson or have undervalued your insurance needs.

There is a provision called “Average Clause” which the insurance companies apply to ensure policyholders do not under-insure. Let us use an example to understand it better.

Say, a businesswoman buys insurance and the insured value of the stocks is less than the total value of the stocks of the business. Now, if the business incurs a loss, as per the average clause, the loss coverage by the insurance company will be up to an extent in the proportion of the insured value of the stocks to the total value of the cost.

So, the claim amount will be calculated in the following way:

Claim Amount = (Loss value) x (Insured value / Total cost)

Suppose, a policy cover of Rs 100,000 is taken for business stocks amounting to Rs 120,000. There is an under-insurance of Rs 20,000. Now, if out of this Rs 20,000 there is a loss of amount Rs 10,000, then the insurance provider will pay Rs 8,333. This amount is calculated in the following way:

Claim amount = 20,000 x (100,000/120,000) = 8333.3333

It is of paramount importance for policyholders to understand how the claim amount is determined. A lack of these insights, may create confusion and lead you to take a cover that does not match your coverage needs.

As a generic rule, it is best to opt for reputed insurance companies such as ICICI Lombard. Doing that will ensure transparent conduct and assured support in the time of your need. You can check the ICICI Lombard Claim Settlement Ratio in case you want to know more about their financial health.

Also read:

  • CSR
  • claim settlement
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