Most life insurance customers in India base their decision on the premium amount. They choose the insurer which provides them with the best value on the policy. While the premium amount is crucial, another critical thing to consider is the insurance company's claim settlement ratio.
The Insurance Regulatory and Development Authority (IRDAI) annually publishes the claim settlement ratios of all life insurance companies. You must examine this data before opting for an insurer.
The claim settlement ratio is essential because it reflects an insurer's claim resolution history. Therefore, when selecting one, compare the claim payment ratios of several insurers.
Let us first understand what Claim Settlement Ratio means.
An insurance company's claim settlement ratio (CSR) refers to the number of claims successfully resolved versus the number of requests received in a given year. For example, if XYZ company receives 100 claim requests in a year and successfully settles 90 of them, its CSR is 90%.
Many experts advise choosing an insurer with the highest CSR when purchasing a policy to ensure that your chosen nominee is more likely to receive policy benefits. A higher CSR also implies that your family will obtain the required insurance while you are away.
The thumb rule is that the lower the CSR range, the higher the reliability. Because in the case of a firm with a broader range of CSR, one is constantly at risk of being found at the lower end of the CSR. Then the chances of settling the claim are significantly reduced.
Seek out companies that are consistent in their claim settlement. It's okay if you have to pass over companies with extraordinarily high CSR in the process. However, one must check CSR over the last five years.
The given formula can calculate the claim settlement ratio:
CSR = Total number of claims in a year x 100
For example, if Company-A settles 8,500 out of 10,000 claims in 2022-2023, its CSR will be 85% (8,500/10,000 x100).
Remember that this ratio describes the total number of health insurance claims and all types of insurance a company offers.
Following is the detailed Claim Settlement Process-
Claims can be reported online, at branches, the central office, the ClaimsCare helpline, SMS, or email. In addition, it makes it more approachable for a policyholder.
Once a claim has been reported, you, as a policyholder, should submit all the relevant documents soon. It ensures that insurers assess and approve the same quickly.
The claim processing should be fast and make the entire claim settlement process hassle-free for the policyholder and his family.
In recent years, thanks to technological development, insurers can settle claims faster. Sometimes, the claim amount is less than Rs 50,000 and is paid within a day.
You may also want to know How to Calculate Incurred Claim Ratio in Health Insurance
Insurance companies may attempt to find loopholes or inconsistencies in your claims to reject them. Therefore, they must compensate you if you don't give them a sufficient basis to deny your claim.
The following are some considerations to make while acquiring insurance.
Always provide accurate and current information. It could include your lifestyle, smoking and drinking habits, medical history, previous insurance policies, employment profile, etc.
Although providing accurate medical history information may raise premiums, you should be aware that this is one of the criteria insurance companies use to deny claims.
Because the nominee will ultimately get the insurance claim, presenting accurate information on the nomination form is crucial.
Refrain from withholding information from your insurer since this could backfire against you.
For example, an insurance company may deny your claim citing "material information concealment" as the cause. Instead, mention any existing insurance policies you have or any insurance policies you have had from a different firm.
The declared claim settlement ratio is the total of all claims paid by a company for all of its life insurance policies and products. As a result, you see merely an approximated ratio and not the actual percentage for each type of policy—endowment cover, money-back policy, term insurance, child plan, group insurance/individual cover, online plan, or offline plan, and so on.
Also, you see a percentage figure, not an actual number. As a result, it is still being determined how many claims a corporation rejected.
For example, if an insurance company rejects 100 claims out of 1,000 claims, the claim settlement ratio will be 90%. The following year, it gets 10,000 claims but rejects approximately 500. As a result, the company's CSR becomes 95%, but the company has denied more claims.
The claim settlement ratio of an insurance company is an excellent indicator to provide insight into the buyer in deciding the policy. However, a policyholder should not limit his research to the claim settlement ratio but should also check the coverage offered by different plans from various insurance companies.
Finally, after checking all this, one should decide the plan best suits his needs.