Decoding Motor Insurance Data: Don't Just Compare Premiums, Understand Claim Ratios!
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 It's calculated by adding the total claims addressed (settled + denied + withdrawn/closed) during the year, divided by the total claims available (a + b) for processing.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 e) Closed Claims: They have closed/withdrawn 4 claims as the customer either cancels their claim request or they do not receive the information requested from the customers for a long period.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.
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).
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Settlement Ratio
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Apr 1, 2023 - Mar 31, 2024
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Disposal Ratio
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Apr 1, 2023 - Mar 31, 2024
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Royal Sundaram
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92.49
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Royal Sundaram
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98.33
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ICICI Lombard
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84.63
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ICICI Lombard
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96.69
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Bajaj Allianz
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87.47
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Bajaj Allianz
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98.19
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HDFC Ergo
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88.34
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HDFC Ergo
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96.50
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Chola MS
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86.10
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Chola MS
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96.19
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Tata AIG
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84.94
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Tata AIG
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98.63
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Go Digit
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92.66
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Go Digit
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98.24
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Acko
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87.51
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Acko
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95.58
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SBI
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89.29
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SBI
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96.25
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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.
