New Delhi -°C
Today in New Delhi, India

Oct 18, 2019-Friday
-°C

Humidity
-

Wind
-

Select city

Metro cities - Delhi, Mumbai, Chennai, Kolkata

Other cities - Noida, Gurgaon, Bengaluru, Hyderabad, Bhopal , Chandigarh , Dehradun, Indore, Jaipur, Lucknow, Patna, Ranchi

Friday, Oct 18, 2019

Decoding claim settlement ratio

Claim settlement ratio is a popular but flawed rule of thumb, used for quick evaluation and comparison of an insurer’s claim settlement experience.There are scenarios where insurers could decline significant number of large sum insured claims, paying the low sum insured claims efficiently and have a healthy looking claim settlement ratio that is based on number of claims and the not value of claims

business Updated: Aug 05, 2019 16:20 IST

Hindustan Times, Mumbai
( )
         

What is it?

Claim settlement ratio is the ratio of number of claims that the insurer has paid over number of claims filed by nominees during a particular period. “If a life insurer has a claims settlement ratio of 90%, it means that the insurer has paid 90 out of every 100 claims filed during the year,” said Mahavir Chopra, director of health, life and strategic initiatives at Coverfox.com. Why should you look at this number? ”From a customer’s point of view, it is important to look into this number to get an idea of how efficiently and quickly the claims are processed by a particular insurer,” said Rohan Kumar, chief executive officer and co-founder, Toffee Insurance.

Don’t look at it in isolation

However, claim settlement ratio independently doesn’t tell you the whole story. “Claim settlement ratio is a popular but flawed rule of thumb, used for quick evaluation and comparison of an insurer’s claim settlement experience,” said Chopra For instance, insurers could have rejected many fraudulent claims during the year, adversely impacting the claim settlement ratio. “Note that claim settlement ratio does not capture the value of the claims paid over claimed or filed. There are scenarios where insurers could decline significant number of large sum insured claims, paying the low sum insured claims efficiently and have a healthy looking claim settlement ratio that is based on number of claims and the not value of claims,” said Chopra.

How to read the data

Claims are of various types such as death, maturity and survival claims. “As insurance policy is an intangible product with the longest term / tenure in any financial product, claims payout is the moment of truth for the policy holder or the nominee of the policy, said Anand Pejawar, president-operations, information technology and international business, SBI Life Insurance. The non approved claims may include rejected claims as well as claims in the pipeline. “Hence, claims ratio is to be seen along with rejection or repudiation ratio as well as with outstanding ratio also. A low claim ratio does not necessarily mean a bad performance. For deeper understanding it is also important to see nature of rejection and ageing of the outstanding claims along with the turnaround times of settlement,” said Pejawar.

First Published: Aug 05, 2019 16:20 IST

top news