The claims settlement rate is a very essential part of an insurance company. This ratio provides information on the number of claims paid and the total number of claims received by the insurance company.
This index is a measure to evaluate the reliability of an insurance company in the resolution of claims.
It is calculated using the following simple formula:
Claims settlement ratio = (total number of claims paid during the period) / (total number of claims received)
Claims made by an insurance company
The Insurance Supervisory Authority of India (IRDAI) publishes and publishes a proportion of all insurance companies in India in the first month of the calendar year.
When looking at the metrics of these companies, the insured should consider not only the metric but also the number of claims the company has received.
If a new insurance company has 100 claims, 97 of which have been resolved by the company, 1 is pending, and 2 claims have been denied, that company has a claim settlement rate of 97%. That’s a good number, but the number of claims received here is far less than any other insurance company that has received 10,000 claims with a 95.3% claim resolution rate.
The consistency of the claims settlement rate over the years also plays an important role.
The historical rate of settlement of claims of the companies during the last 5 years should be reviewed. There should be no inconsistencies in the claims settlement rate.
The narrower the range of the claims settlement rate, the better and more reliable the company will be. A company with a rate between 90% and 97% is more reliable than a company with a loss rate between 75% and 94%.
Claims can be reported online, at branch offices, at headquarters, on the ClaimsCare hotline, by SMS, or by email. This makes it more accessible to the insured.
2. Faster processing
The claim should be processed quickly and the entire claim resolution process should be made easy for the insured and their family. The shorter the average claim processing time, the better.
As soon as all the relevant documents have been assessed and approved, the final billing takes place. Complaints must be resolved as soon as possible from the date of notification.