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Beshak Insurance dictionary

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Claims Settlement Ratio
Term Life Insurance

Claims Settlement Ratio measures the ratio of the number of claims settled vs the number of claims made. It simply helps understand the number of claims an insurer declined.

If an insurer received 100 claims during the year and paid off 98 claims - the claim settlement ratio will be 98%.

It is important to note that this is not the right measure to evaluate whether an insurer is good at claims settlement or not.

  1. It does not really measure the value of the claims rejected. In the above example, if the insurer declines the claims of two policies with the highest sum assured it will never reflect in the claim settlement ratio.
  2. Rejection of claims does not mean an insurer is bad at service or response. It merely means that an insurer has rejected claims. Insurers need to reject claims that are invalid or have fraudulent representations to remain financially viable.
  3. A 100% claim settlement ratio will not guarantee your claim will be paid. If an insurer has a 100% claim settlement ratio, and you misrepresent in your proposal form, your claim will still be declined.

More on this here.