2. What does Claims mean?
 Claims are a formal intimation to the insurance company about the
receiving the sum assured as per the policy terms. The insurance
company after reviewing the validity of the claims makes the agreed
payment to the insured or the nominee.
The claims occur under two circumstances:
 Maturity Claim: This type of claim needs settlement once the policy
completes the term selected. The policies like the endowment plans,
money back plans or child plans fall under this category.
 Death Claim: This occurs in case of death of the policyholder during
the term of the policy. The death could either be due to illness or
accidental. The term plan is the biggest example.

3. What Does Claim settlement Ratio Mean?
 The claims settlement ratio is the proportion of death
claims which have been settled by the insurance
company from amongst the total claims received by the
insurance company.
 Claim Settlement Ratio = Total no. of death claims approved by the insurer
Total no. of death claims received by the insurer.

4. For Example
 Suppose an insurance company receives 1500 claims in the year 2013-
2014.Of these
 No. of claims settled were 1050 i.e. amount paid to the nominee.
 No. of claims rejected by the insurer 100.
 No. of claims where in the decision is pending (1500-1050-100)=350.
Now, calculating the claims settlement ratio using the formula
mentioned above:
 Claims settlement ratio = (1050/1500)*100=70%
 Claims Rejection ratio = (100/1500)*100=6.66%
 Claims pending ratio = (350/1500)*100=23.33%

5. What does Claim settlement Ratio indicate?
 This ratio provides a fair idea whether the insurance
company can be trusted as a good option for insurance
cover especially in case of settlement of death claims
since the policyholder would want a reliable insurer in
case of death of the policyholder. Buying the insurance
policy and premium payment is not the only objective
or the end of the insurance process.

6. The Claims settlement ratio for the top five insurance companies
as per the IRDA report.
Life Insurance Companies Claims
settlement Ratio (%)
 Life Insurance Company (LIC) 97.73
 ICICI Prudential 96.29
 HDFC Standard 95.76
 SBI Life 94.41

7. Diagram

8. Limitations of Claim Settlement Ratio:
1. Claim settlement Ratio gives the total number of claims settled by
an insurer irrespective of the type of insurance policy. So, for an
individual who wishes to analyze the ratio for each type of plan this
CSR does not help.
2. The ratio gives percentage of settlement and not actual figures which
would generally give a better idea.
3. The settlement ratio if calculated during the initial years of the
product launch in the market would give a poor ratio, since it is the
longetivity of the plan in the market which actually decides the CSR
better.
4. CSR vary each year across companies, so the policyholder needs to be
on his toes to keep an eye on the insurers.

9. Compare Insurance Online with PolicyX.com
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