What is Claim Settlement Ratio and why does it matter?
One of the most important things that an individual can have in today’s age is an insurance policy. Unfortunate events or circumstances might fall upon an individual at any time. Although it is not possible to know in advance when these events might happen, it is useful to have a contingency plan in case such an event arises. An insurance policy helps by providing the necessary financial assistance if an unforeseen event leads to loss or damage to life or property.
What is Claim Settlement?
When an individual takes life insurance, they take it with the hope that the beneficiaries of the policy will receive the benefits in the case of the insured individual’s death. In some cases, the insurance company might reject the insurance.
The ratio of the number of claims paid against the number of claims filed is known as the claim settlement ratio. The higher this ratio is, the more beneficial it is for the insurance company. A high claim settlement ratio indicates the solvency and credibility of the insurance company. Before taking life insurance, it is necessary for an individual to check and go through the claim settlement ratio of an insurance company.
Why Claim Settlement Ratio Matters
The Insurance Regulatory and Development Authority (IRDA) releases the claim settlement ratio of every insurance company each year. To ensure successful claim settlement, selecting an insurance company with a high claim settlement ratio is useful. An individual can make informed decisions and select the right policy by considering the claim settlement ratio.
Importance of Claim Settlement Ratio
Here is why Claim Settlement Ratio is important
Reliability of Insurer
Claim Settlement Ratio is important because it is an indicator of an insurer’s reliability. The higher the claim settlement ratio, the more stable and reliable the insurer is said to be. It is also an indicator of an insurance company’s solvency. To get insurance benefits, you need to pay premiums. Therefore, it is important that you select an insurance company that is not only reliable but also solvent and financially stable. The claim settlement ratio is a valuable factor that should be considered.
Assures financial stability
To receive the benefits and financial aid after the passing of the insured individual, the family has to file a claim with the insurance company. There are chances that the insurance company might reject the claim. In order to make sure that such a situation does not take place, an individual should select an insurance company with a high claim settlement ratio. This will ensure that the claims filed are settled and the beneficiaries of the policy receive the assured sum.
Process of Claim Settlement
The process of claim settlement involves 4 main steps.
- The first step involves providing a written intimation to the insurer containing the details of the insured, the policy number, etc. This needs to be done as soon as possible to register the claim.
- Once the insurer is intimated bout the deceased, the beneficiaries need to submit the necessary documents like the death certificate, post-mortem report, FIR, etc. which might be required too.
- In order to ensure quick claim settlement, all the documents should be submitted quickly. Once all the necessary documents have been submitted, the insurer can make a decision about the claim.
- The insurance company has to settle a claim within 30 days of receiving the documents. The insurance company may order an investigation within this period to verify the claim.
The claim settlement ratio is an important factor that can help you make crucial decisions regarding your insurance policy. Any individual should carefully consider the claim settlement ratio along with other factors while purchasing an insurance policy.
What is a good claim settlement ratio?
A claim settlement ratio higher than 80% is considered to be good.
What is the importance of insurance claims?
Insurance claims are important as they help in providing financial assistance to your loved ones or beneficiaries in the case of an unforeseen event.
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