Claim Settlement Ratio

Claim is the right to obtain money on occurrence of an event. It starts with formal payment requests that are made by the nominee to the insurer on occurrence of an event to the insured, based on the terms of the insurance policy that he/she had opted for. These payment requests are reviewed by the insurer based on their validity and then paid out to the nominee. This process is called Claim Settlement.

What is Claim Settlement Ratio?

Claim settlement ratio denotes the number of death claims settled by the insurance company against the total claims received by the insurance company. It is expressed in terms of percentage.

A claim settlement ratio, therefore, refers to the number of formal payment requests insurers approve and pay out to the claimants out of the total number of claims that they receive. It is calculated by dividing the total number of approved claims by the total number of claims an insurance company receives in a given period of time.

Eg. If an insurance company received 100 claims in total in a year but only approved around 95 of them, then the claim settlement ratio will be 95%.

Potential policyholders tend to opt for companies that have a high claim settlement ratio, as it works as a trustworthy proof that their claim has a good chance of getting approved.

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