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What are the Principles of Claim Settlement?

In their pursuit to meet the insurance market demands, the suppliers or the insurance providers must adhere to a certain set of principles surrounding claim settlement.

  • 24 Jan 2023
  • 3 min read
  • 589 views

Like any other market, the insurance market also runs on the dynamics of demand and supply. People need insurance companies to offer them insurance products that protect them from various financial losses. At the same time, the insurance providers are also required to meet the expectations of their customers—the policyholders. The most crucial expectation that people have from these insurance providers is that their claim will be settled easily, that is, they would be reimbursed with the insured sum as and when needed.

Principles of claim settlement

In their pursuit to meet the insurance market demands, the suppliers or the insurance providers must adhere to a certain set of principles surrounding claim settlement. There are primarily three major pillars of claim settlement:

Verification of the loss

It is the responsibility of the insurance provider to verify the claim. They must ensure that the authentic claims do not get rejected or delayed, and the inauthentic ones do not make it to the final claim disbursal. This involves estimating correctly the instance of loss and corroborating the same with the policy coverage.

Prompt payment

The second principle for settling a claim is to clear the claim amount at the earliest—that is as soon as the information collection and verification are completed. Once the claim is found to be valid, the payment of the insured sum should not be delayed by any means.

Assistance to the insured

The insurance company must provide systematic and consistent assistance to the policyholder during claim settlement. While the need for insurance is widely understood, its processing is still a long shot for many policyholders. It is the responsibility of the insurance provider to ensure that their customer has access to correct information about the claim settlement process.

Some key points for policyholders

While insurance providers are expected to stick to the principles mentioned above, insurance buyers are suggested to take note of certain factors surrounding claim settlement. These are:

  • Before buying an insurance policy, you should research well to ensure that the company you opt for is credible. Always check the claim settlement ratio of your preferred company. The higher the claim settlement ratio, the better the chances of your claim being settled without any hassles.
  • You can find the claim settlement ratio of all the IRDA-registered companies on the IRDA Claim Settlement Ratio 2022
  • Say, you zero in on an insurance provider with a high claim settlement ratio. But, that is not enough. You should also check the overall financial health of the company.

Also read:

  • claim settlement
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