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Claim Settlement Ratio – All Your Questions Answered

Jun 14, 2018 | 2 years ago | Read Time: 2 minutes | By iKnowledge Team

When you buy an insurance plan, you enter into a contract with the insurer. In return for a premium, they promise to pay you a certain sum if you make a claim. An insurance claim is nothing but a formal request to the insurer to release your sum assured. In the case of life insurance, your beneficiary gets the sum assured after your demise.

Is death claim the only claim I am entitled to?

No! There are two types of claims – death claim and maturity claim.  

  • Death claim

If you – the policyholder — don’t survive the policy tenure, your nominee can make a death claim. Such a claim must be substantiated by relevant documents such as death certificate and other requirements of a claim process.

  • Maturity claim

If you outlive the policy, the insurer pays you the amount that was agreed upon at the time of signing the policy. This amount is known as the sum assured.

Will my insurer always settle my claim?

The simple answer is: not always.

The following are the most common reasons for claim rejections:

  • Incomplete or incorrect information given in the application form

Be honest while filling the application form at the time of buying the insurance plan. Any concealment or misstatement of information could cost you or your family. Do not conceal any diseases or lifestyle habits while buying your policy.

  • Lapsed policy

Insurance is an agreement between you and the insurer. If you do not honour your promise, the insurer is not bound to stick to the promise either. You must ensure that you pay the premiums on time. If you miss any payment, ensure that you pay them within the grace period given by the insurer. Your policy lapses thereafter, and your insurer is not obligated to pay your claim.

  • Death due to reason not covered by the policy

You must read the policy documents carefully while buying insurance. Understand the terms and conditions well to avoid any shocks at the time of the claim. Your insurer is not liable to settle a claim that is made for death due to reasons other than those mentioned in the policy. 

So, what should I keep in mind before choosing my insurer?

Check the insurer’s Claim Settlement Ratio (CSR). It acts a yardstick to gauge the reliability of the insurer. Simply put, it is the percentage of the total claims settled in a year to the total claims received. Usually, the higher the ratio, the lower the rejection chances. When the insurer has a higher CSR, you have some assurance about your claims being settled.

Why can’t CSR be the sole determinant of the insurer’s credibility?

CSR states the percentage of the settlement. However, it does not state the actual numbers. The latter gives a better idea of the insurer’s credibility. Moreover, CSR keeps changing every year. Lastly, such a ratio covers all the plans offered by the insurer. It does not give a separate ratio for each plan.

The bottom line

Ensuring that your claim will get settled is as important as buying life insurance. You must check the CSR of the insurance company, though this should not be the sole criterion for buying an insurance plan.

Advt. no.: IA/May 2018/4020

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