Choosing motor insurance isn't
just about finding the cheapest premium; it's about ensuring peace of mind
knowing your insurer will be there when you need them most. Two key
metrics, the Claims Settlement Ratio and the Claims Disposal Ratio, provide
valuable insights into how effectively insurance companies handle claims,
derived from publicly available data published by the Insurance Regulatory and
Development Authority of India (IRDAI).
|
Settlement
Ratio |
Apr 1, 2023 - Mar 31, 2024 |
|
Disposal Ratio |
Apr 1, 2023 - Mar 31, 2024 |
||
|
Royal Sundaram |
92.49 |
|
Royal Sundaram |
98.33 |
||
|
ICICI Lombard |
84.63 |
|
ICICI Lombard |
96.69 |
||
|
Bajaj Allianz |
87.47 |
|
Bajaj Allianz |
98.19 |
||
|
HDFC Ergo |
88.34 |
|
HDFC Ergo |
96.50 |
||
|
Chola MS |
86.10 |
|
Chola MS |
96.19 |
||
|
Tata AIG |
84.94 |
|
Tata AIG |
98.63 |
||
|
Go Digit |
92.66 |
|
Go Digit |
98.24 |
||
|
Acko |
87.51 |
|
Acko |
95.58 |
||
|
SBI |
89.29 |
|
SBI |
96.25 |
||
Let’s break them
down.
Claims Settlement
Ratio: This ratio reveals the percentage of claims an insurer
successfully paid out during the year. It's calculated by dividing the
total number of claims settled for the year ending March 31st by
the total claims available for processing during that same period, which
includes both opening outstanding claims and those registered during the
year.
Let’s simplify
these terms:
a) Opening
Outstanding Claims: They have 5 claims left over from previous year, which are carried
forward to next year to be addressed.
b) Registered claim: They have 95 claims which
are newly reported in the current Year.
c) Settled
Claims: They successfully approve and pay out 92 claims (settled claims).
Settlement
Ratio: The Insurer’s Settlement Ratio for that financial year is calculated by
the Total Claims Settled (c) divided by Total Claims handled (a+ b), which
works out to 92% (92/(5+95)).
A high settlement
ratio indicates that the insurer has successfully paid a larger share of the
claims they received, reflecting their reliability.
Claims Disposal
Ratio: This ratio signifies the speed and efficiency with which an
insurer makes decisions regarding claims. It's calculated by adding the total
claims addressed (settled + denied + withdrawn/closed) during the year,
divided by the total claims available (a + b) for
processing.
Let’s similarly
work out the Disposal Ratio as well.
d) Denied
Claims: They have denied 2 claims due to fraud / exclusions during the year
(denied claims).
e) Closed
Claims: They have closed/withdrawn 4 claims as the customer either cancels
their claim request or they do not receive the information requested from the
customers for a long period.
Disposal
Ratio: The Insurer has cleared 98 claims (c + d+ e) from the total
available claims (a +b) during the year, and the Insurer’s Disposal Ratio is
98% (92+2+4) / (5+95).
A high disposal
ratio suggests the insurer is proactive in handling claims, leading to quicker
resolutions and a smoother claims process.
Understanding
these ratios is not merely a financial exercise; it is about ensuring peace of
mind. When customers are aware of how an insurer performs in terms of claims
handling, they can make more informed choices.
In short, a high
settlement ratio indicates that the insurer is likely to honour claims, while a
high disposal ratio suggests efficiency in processing claims.
Armed with this knowledge,
consumers can prioritize insurers who demonstrate strong performance in both
claims settlement and disposal consistently. Making an informed decision about
motor insurance goes beyond simply finding the lowest premium; it's about
selecting an insurer that offers financial security alongside the peace of mind
of knowing your claims will be handled efficiently and fairly.