The IRDA claim settlement ratio is defined as the percentage of settled insurance claims by an insurer compared to the total number of received claims in a year. Every year, the Insurance Regulatory and Development Authority of India (IRDAI) releases extensive data for all life insurance companies and their claim settlement ratios.Read more
The higher the ratio, the better it is for the insurance company. For instance, if the IRDA claim settlement ratio of an insurance company is 96%, it means that the insurance company has settled, i.e., paid the sum assured to the nominee(s), for 96 claims out of every 100 claims received. This also means that the remaining 4% of insurance claims are repudiated, rejected, unclaimed, or pending by the insurance company on various grounds.
When one purchases a life insurance policy, one should be mindful of the fact that the nominee(s) or beneficiary (ies) should receive the sum assured after the death of the policyholder. After all, in the event of one’s death, the proceeds of the sum assured payment from the insurer shall ensure that the policy holder’s dependents have sufficient corpus to be financially secure.
But what will happen if the insurer doesn't settle the nominee's claim? It is therefore important to understand which insurance company maintains a satisfactory track record in settling death claims. IRDA claim settlement ratio is a key factor to consider while evaluating a life insurance policy as it reflects the reliability of claims’ resolution by a life insurance company. A comparison of the IRDA claim settlement ratios of different insurance companies will go a long way in helping to choose a life insurance policy.
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