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Buying Term Insurance Plan? Go For Insurer With High Claim Settlement Record

Adhil Shetty

Life is unpredictable, and no one knows what the future holds. Insurance helps us deal with the unpredictability of life by providing financial support to our dependents. Amongst insurance products, a term insurance plan is advisable for all working individuals with financial dependents. It’s a must-buy as it works as an income replacement tool for your family in the unfortunate event of your untimely demise. If you’re in the market for your first life insurance plan, strongly consider buying a term insurance policy to safeguard your loved ones.

While there are a number of factors you should consider while buying a life insurance product, what holds significance amongst others is how quick and hassle-free the payment of the sum assured to your beneficiary is  after your demise. The claim settlement ratio of an insurance company provides some clues in this regard.

Here is a lowdown on claim settlement ratio to make a wise choice.

What Is Claim Settlement Ratio?

The claim settlement ratio reflects the total death claims settled or paid by a life insurance company during a financial year. The CSR is calculated by dividing the number of claims settled and the number of claims received. For example, a life insurance company received 1000 death claims, and it settled 924 claims, the claim settlement ratio would be 92.4%, and claim rejection rate would be 7.6%.

Importance Of Claim Settlement Ratio 

The claim settlement ratio of an insurance company shows its efficiency and capacity to manage its insurance claims. So CSR is indicated as a percentage and could be anywhere between 10% and 99%. An insurance provider with a higher percentage is preferable as it reflects higher claim settlement. The claim settlement ratio is important as it also shows the reliability and financial stability of an insurance company. An insurance company that settles fewer claims will be seen as less reliable and less financially stable. Another important aspect is the claim payment per cent. A lower claim payment per cent with higher claim settlement ratio may indicate that the insurance company is good at the settlement of low-value claims than bigger claims.

Top 10 Life Insurance Companies
(As per claim settlement ratio in FY 2018-19)
Insurance Company Claim Settlement Ratio (% of no of policies received for claim)
FY 2018-19 FY 2017-18
TATA AIA LIFE 99.07% 98.00%
HDFC LIFE 99.04% 97.80%
MAX LIFE 98.74% 98.26%
KOTAK LIFE 97.40% 93.72%
BHARATI AXA LIFE 97.28% 96.85%
EXIDE LIFE 97.03% 96.81%
Note: Data taken from IRDA Annual Report- 2018-19, Statement 6 for Individual Death Claim

What You Need To Keep In Mind

While assessing the claim settlement ratio of an insurance company, there are a few crucial things you must not ignore. You should check the claim settlement ratio for 3 to 5 years to ascertain its claim settlement consistency. When a person buys a life insurance policy, the dependent beneficiary may request for claim at any point of time in the future i.e., after 3 years, 5, or maybe 15 years. In such a situation, the insurance company’s claim settlement consistency becomes a vital criterion for the buyer. What if the insurance company is showing an excellent settlement ratio now, but its performance declines after a few years? You can’t port a life insurance policy to another insurance provider, and it could be expensive if you buy a policy at a later age. So, it is better to opt for the insurance policy from a company that has consistently shown a high claim settlement ratio year after year.


Besides the claim settlement ratio, the service quality of the insurance company must be considered while buying a life insurance policy. When making a claim, the insured won’t be there to assist the beneficiary, so the service quality of the insurance company will be the key at that time.

Though CSR is critical in the selection of a life insurance policy, it should not be the only factor for choosing an insurance policy. Usually, 90% is considered a good CSR. You can also get feedback from friends and family on the service quality of your insurance provider. There may be a genuine reason for a company having a low CSR, such as a spurt in fraudulent and delayed claims. So while choosing a policy, also give weight to the premium charged, the sum assured, add-on benefits, customer service and the company’s track record. Remember that comparison is the key to making a wise choice.

The writer is CEO,, India’s leading online marketplace for loans and credit cards.