The claim settlement ratio can be defined as the number of claims passed by an insurance company within a particular interval of time. It is a crucial factor to take into account before selecting an insurance plan from a life insurer.
Since it is a metric that shows the rate of acceptance of claims by a company, this ratio can help you select the right company for buying a policy. Here’s explaining the basic facts about the claim settlement ratio in detail.
Understanding Claim Settlement Ratio
The percentage for this ratio is measured for all company products together, instead of a single product. The following is the formula to calculate the ratio:
Claim settlement ratio = Total number of claims approved/Total number of claims received
Say, the insurer gets a thousand claims in a year, out of which twenty-nine are rejected. So, the ratio will be 97.1 percent. A higher percentage means that there is a greater probability of the policyholders to see their claim get accepted upon filing.
The Implications Of A High Claim Settlement Ratio
This ratio indicates the condition of the finances of the company. High ratios, like those over 95 percent, tell a prospective customer that the company’s finances are secure. After all, only when the company has a strong financial standing, they are willing to pay the claim to a lot more customers. In fact, this ratio is one of the things you need to check about a life insurer, besides the highest benefits and lowest premiums.
Besides, it also implies that the life insurer cares for the loved ones of the customer, and is willing to make it easier for them during the trying times. All the top insurance companies of the country maintain a high percentage of this ratio.
Reasons For Policy Claims To Get Rejected
There are many reasons why policy claims get rejected, such as:
Incorrect Or Missing Details:
It is essential to double-check the specifications that you have penned down in the insurance policy forms. During the claim process, your application is reviewed and compared with your original form. If the insurer finds any information to be faulty or misleading, they might reject the claim straight away.
Not Disclosing Your Medical History:
You need to provide the correct medical history at the time of filling up the forms. Habits like smoking, alcohol intake, or any other such illnesses have to be shared with your insurance provider. This will help in removing your hindrances during claim settlement.
The Issue Of Policy Lapse:
Policy lapse is the most common reason for claims getting rejected. Most insurers provide you with a grace period for paying the premiums on time. But, claims won’t be processed if you don’t have the policy renewed within that grace period.
Now that you have a clear idea about the claim settlement ratio make sure to remember it as a factor to consider in choosing an insurer. Besides, you will also get to make the claim on time as you don’t want to face the hassles of policy lapse.