What is claim settlement ratio?

Be it life, health or any other type of insurance, buying a policy can be a confusing, if not an outright difficult, exercise, given the vast plethora of insurance players in the market. To ease the process of selection and depending on the type of insurance you want to buy, you can consider various parameters to sift out the best insurers. One such factor is the claim settlement ratio, which can hint at the reliability of an insurance company and the effectiveness of its claim settlement process.

What is claim settlement ratio?
As the name suggests, claim settlement ratio is the number of claims that an insurer settles or clears, compared to the total number of claims it receives from policyholders or their nominees every year. It is an indicator of how efficient an insurance company is at settling claims and, thereby, a pointer to its trustworthiness. This ratio is published for every insurance company every year by the insurance regulator, Insurance Regulatory and Development Authority of India (Irdai), on its website. Policybuyers can go through this list to make a purchase decision.

Also Read: Health and general insurance claim settlement: 5 fastest and 5 slowest insurers to settle claims within 3 months

Why is it important?
Since policyholders pay a heavy premium, especially in the case of life and health insurance policies, it can be devastating for nominees or the insured to have the claim rejected at a time when financial support is critical. This is the reason one needs to know the probability of an insurer paying the claim amount, when needed. Claim settlement ratio indicates this probability. Though there is no specified ratio that is considered good, an insurance company with a ratio of 95% or higher can be depended upon to settle your claim quickly and smoothly without too many hurdles.

Also read: Latest claim settlement ratio of health and general insurance companies released by IRDA in 2025, Navi, Acko take lead, Star Health, Zuno fall below 90%
How is it calculated?
One can calculate the claim settlement ratio by dividing the number of claims that an insurance company settles in a year by the total number of claims it receives, and multiplying it by 100.


For instance, if an insurer gets 1 lakh claims in a year and settles 96,000, its claim settlement ratio will be 96%.