Claim Settlement Ratio

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Definition

Claim settlement ratio or CSR of an insurance company is the ratio of the number of claims settled vs the number of claims filed in a year. Commonly it is used as “The claim settlement ratio of ABC insurance company is 99%”. That means, out of every 100 claims filed the company paid for 99 claims. This data about any insurance provider is publicly available and is verified by IRDAI.

Description

The claim settlement ratio indicates the credibility of the insurance company. The ratio shows the number of claims the insurance company has settled in a year’s time out of the total claims filed.

In simple words, an insurance company does not pay all the claims that are filed. Some claims are rejected on basis of the terms and conditions to which the policyholder agreed at the inception of the policy. The claim settlement ratio compares the claims filed, and the claims settled. Therefore, the claim settlement ratio of an insurer is an important parameter that customers take into account while buying an insurance policy.

Below is the formula for the claim settlement ratio:

Claim settlement ratio = Total number of claims settled in a year / total number of claims in a year) X 100.

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