When searching for a four wheeler insurance policy, you might have come across the term ‘claim settlement ratio’. Have you ever wondered what that term meant? If so, this article will give you a clearer understanding of claim settlement ratio in four wheeler insurance. Read on – 

What is the claim settlement ratio in motor insurance? 

The claim settlement ratio (CSR) is an indicator of the dedication and commitment of the insurer towards solving the claims of its policyholders. It refers to the number of claims an insurance company solved in a year as compared to the number of claims they received. It is usually displayed through a percentage. The higher the CSR, the better is it is for you. 

How to calculate the claim settlement ratio

The claim settlement ratio is calculated by dividing the number of claims solved with the number of claims received and then multiplying the answer with 100. A formulaic representation of the same would be: 

Total number of claims solved/total number of claims received × 100 = CSR

So, for instance, if a vehicle insurance company received 200 claims in a year and solved 180 out of them, the claim ratio can be calculated thus: 

180/200 × 100 = 90% 

This would be a reliable insurance company as they have been able to solve 90% of all the vehicle insurance claims they received in a year. Usually, policyholders prefer a claim settlement ratio of 90% or above. 

 

CSR differs from category to category

The IRDA publishes the claim settlement ratios of all insurance companies every year based on their performance in the past period. It is to be noted that the claim settlement ratio differs for each general insurance category. An insurer may have a high CSR in their health insurance category but a lower one in their vehicle insurance category. Therefore, one must look at the CSR of the particular category in which they want to buy insurance. 

 

Shortcomings of CSR

As helpful as CSR is, one must remember that it does not provide a complete overview of the claim settlement process of any insurance company. The CSR for four wheeler insurance will be calculated by considering the number of claims that have been approved. It does not take into consideration factors such as how the claims get approved, the amount of time it takes for approval, whether the claimant gets the full claim amount, and so on. 

Moreover, it is important to look at other factors that can influence the CSR. For instance, an insurance company that is new in the market may have a high CSR because it is currently dealing with a relatively shorter number of claims than other, well-established insurance companies. 

 

Other features to look for besides the CSR 

A high CSR should be ideally paired with the following features for you to have a smooth motor insurance experience: 

– Number of network garages

– Time taken to process and settle the claims

– Customer service department

– Time taken to reimburse the policyholder in case of reimbursement facility

– Coverage and the number of add-ons offered with the four wheeler insurance policy

We hope this article has been helpful to you and has increased your understanding of the claim settlement ratio so that you continue to make better decisions regarding insurance.