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Claim Settlement Ratio - Importance, Process & How to Calculate?

Claim Settlement Ratio - Importance, Process & How to Calculate?

The claim settlement ratio (CSR) is a metric used to measure the percentage of life insurance claims an insurer settles during a financial year compared to the total claims. This includes pending insurance claims from the previous year.

Unforeseen circumstances can often have a grave impact on the financial health of a person or even an entire family. That is why the importance of life insurance cannot be overstated. In the event of the demise of the financial provider, life insurance policies offer their dependents a much-needed financial safety net.

However, not all life insurance policies are alike. Some offer additional benefits, some offer flexibility in tenure, while others offer economic premiums. With the variety of insurance products in the market, it can be difficult for insurance-seekers to narrow down on the policy that best meets their needs.

This is where an important feature known as the Claim Settlement Ratio comes into play. It is an objective, numerical feature that can help you make the crucial decision of which life insurer you should opt for. Here is all you need to know about the claim settlement ratio.

What is Claim Settlement Ratio?

The Claim Settlement Ratio (CSR) of an insurance company is the percentage of insurance claims settled in a financial year compared to the total claims filed. CSR indicates the credibility of the insurance company. This highlights the importance of your life insurance policy, since having your claims reliably filed and settled is a crucial aspect of your policy.

In general, the Claim Settlement Ratio of an insurer is viewed as an indicator of its overall claim-solvability and risk management ability. The higher the Claim Settlement Ratio of an insurance company, the better.

Our Claims Settlement Ratio for FY2020-21 is 97.1%.

How is Claim Settlement Ratio Calculated?

The Claim Settlement Ratio of an insurer is calculated using the formula given below:

Claim Settlement Ratio = (Total no. of claims approved/Total no. of claims received) x 100

This result is represented in the form of a percentage. Let us assume that an insurance company has a Claim Settlement Ratio of 70%. This means that for every 100 claims received by the insurer, 70 claims are settled and paid out.

It is important to keep in mind that a Claim Settlement Ratio is not just an aggregate of claims paid out for life insurance policies, but all forms of insurance offered by an insurer.

Why is Claim Settlement Ratio Important?

The importance of life insurance lies in the assurance that, in the unfortunate event of the demise of the insured, his or her beneficiaries will be able to claim the insurance coverage. This, in turn, will help them look after their current and future financial needs in the absence of the insured. This is the primary agreement made between the insurer and the policyholder.

Having said that, there are certain circumstances under which the claim might not be paid out. Some of these factors might be related to the insured. This could be missing or incorrect information while filling out forms, or hiding one’s medical history while availing life insurance policies. Other reasons for claim rejection could also be related to the insurer, such as incompetent practices and low trustworthiness.

At the end of the day, life insurance policies can only be as reliable as the insurance company that provides them. Thus, the Claim Settlement Ratio helps an insurance-seeker make an accurate judgement of the trustworthiness and competence of a potential insurer.

Every financial year, the Insurance Regulatory and Development Authority (IRDAI) in India issues the Claim Settlement Ratios for every insurance company in the country. A high Claim Settlement Ratio can help you determine whether a company can be depended upon to provide the promised claim to the beneficiaries of the insured. It also indicates that the insurance company has a high customer satisfaction experience and a strong underwriting procedure.

How to Claim a Life Insurance Policy?

We buy an insurance policy so that our family members stay financially protected even if we are not present with them. Thus, it is the responsibility of the insurance provider to make sure that the claim under the policy is settled quickly and appropriately. So, the family can receive financial support as soon as possible.

Canara HSBC Oriental Bank of Commerce Life Insurance guarantees you the quickest claim settlement process, with no hassles, in the following simple steps.

a) Registration of the Claim: At the earliest, you need to notify the insurance provider of the death.

b) Fill the Claim Forms: Fill out the required claim form and submit it along with the necessary documents. These are available online.

c) Processing and Claim Settlement: After you have submitted these documents, the company’s able assessors will verify the claim. After the decision is made, the claim will be settled and the beneficiary will receive the amount.

Claim Settlement Process

Documents Required for Claim Settlement

To file the claim, you need to make sure that you present all the necessary documents to the insurance provider so that the process can happen without any obstacles.

Here is the list of the documents required by the insurer:

a) Policy Document
b) Death Certificate of the Deceased
c) Death Claim Form (Form C)
d) A physician’s statement form to be filled out by the medical practitioners (Form P)
e) Treating Hospital Certificate (Form H)
f) Employers' Certificate (Form E)
g) School Certificate

Things to Keep in Mind to Avoid Claim Rejection

To ensure that your claim settlement process happens smoothly and you get your claim without any objection, you should keep in mind the following things.

1. Disclose all the Relevant Facts

Insurance policies work on the "full disclosure principle." When purchasing an insurance policy, you should disclose all the necessary facts truthfully to the insurer. Based on your information, the premium is calculated. If you hide the details to get a lower premium, the insurer may cancel the policy as hiding relevant facts amounts to a breach of contract under insurance.

2. Fill in the Application Form Yourself

Many insurers can offer to fill out your form themselves. However, you should fill in the details asked in the form yourself so that facts don’t get misinterpreted or misused.

3. Read the Terms and Conditions

This is the most important part of the policy. You need to be fully sure about the policy you are purchasing. You should know your life insurance terms and conditions thoroughly.

Use the free-look period offered by the insurance companies to your advantage by taking this time to carefully look over the policy.

If you do not find the policy suitable, you can cancel it within these 15 days and get a refund.

4. Inform your Nominees

An insurance policy requires you to name nominees. These are the people you nominate to receive the sum assured if you die during the policy. You should keep your nominees informed about the policy and the claim process.

5. Keep your Documents Safe

The nominee appointed by you cannot initiate a claim after your death without submitting the necessary documents. Make sure you have all the documents and claim forms with you so that the claim can be settled faster.

What Should be the Ideal Incurred Claim Ratio?

The claim ratio, or claim settlement ratio, tells us the percentage of claims that are settled by the insurance company out of the total number of claims raised.

The higher the claim ratio, the better the chances of your claim being settled. But note that you should not base the decision solely on the claim settlement ratio.

Check the size of the insurance company to get a better idea of the claim ratio. Larger companies can have a lower claim ratio due to the volume of claims they are handling.

FAQs Related to Claim Settlement Ratio

The first thing you need to do while applying for claims is notify the insurance company about the death of the insured. For this, you can contact the agent. You can apply from the website as well.

To get more assistance regarding claims and settlements, you can follow this link and fill out the form:
https://www.canarahsbclife.com/claims/get-claim-assistance.html

Alternatively, you can also call our toll-free number: 1800-258-5899.

The claim settlement period may depend on the following factors:

a) Type of policy
b) Claim amount
c) Age of the policy
d) Need for claim investigation

Your claims are settled within just 30 days of document submission here at Canara HSBC Oriental Bank of Commerce Life Insurance. However, if your policy is eligible for InstaPromiseTM claim settlement, the claim can be settled within one working day.

You can get the claim forms either through the company’s website or by visiting the nearest office. For filing your claim with Canara HSBC Oriental Bank of Commerce Life Insurance, visit:

https://www.canarahsbclife.com/claims/claim-forms.htmlto download the necessary claim forms for both individual and group policies.

Alternatively, you can also visit the nearest branch office of the insurer.

The claim benefit will be provided to the beneficiary/nominee, when the person for whom the policy was taken, dies during the term of the policy.

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The following parties are eligible to receive the claim:

a) The nominee appointed by you
b) Guardian of the nominee if the nominee’s age is less than 18 years.
c) The proposer or the assigned party of the policy.
d) You will be eligible to receive the claim, if the claim is for disability or a critical illness covered under the life insurance policy.

The claim must be reported by you to the insurance company at the earliest time after the death has occurred. This helps speed up the claim settlement process.

However, terminal and critical illness claims can be filed within 30 days of the diagnosis.

The insurer can reject your claim in the following circumstances:

a) The death occurred due to an exempt cause.
b) If you have entered false information on the application form.
c) The policy had lapsed before the claim.
d) Not disclosing the information that is essential to the life insurance policy.
e) If there is a discrepancy found in the claim documents submitted.

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