Understanding Claim Settlement Ratio: Why a High CSR Matters in Term Insurance

When buying a term insurance plan, one of the most important things to consider is the insurer’s Claim Settlement Ratio (CSR). It’s a simple number that says a lot—it shows how often an insurer honours its promises when it's needed the most. A high claim settlement ratio reflects the reliability of the insurer and can give you confidence that your loved ones will receive financial support if the unexpected happens. Let’s understand what CSR is, how it impacts your decision, and why it plays such a crucial role in term insurance.

Why the Claim Settlement Ratio is Important

The Claim Settlement Ratio is like a trust signal. It indicates how many claims an insurance company has settled out of the total number of claims received in a year. The higher the CSR, the better.

• Insurer’s Credibility: A high CSR shows that the insurer has a good track record of honouring claims. It reflects their commitment to fulfilling the promise made at the time of purchasing the policy. This becomes especially important for term insurance plans, where the payout is the sole benefit for your family in case of your absence.
• Security for You: When you’re choosing a policy that’s meant to protect your family’s financial future, you want to be sure the insurer won’t leave them hanging. A high CSR gives you peace of mind knowing that the claim process is likely to be smooth and dependable.

How Claim Settlement Ratio Impacts Your Term Life Insurance

When selecting a term insurance plan, many people focus on low premiums or high cover amounts. But the claim settlement ratio should carry equal—if not more—weight in your decision. Here’s how it affects your experience:

• Peace of Mind: A high CSR tells you that your insurer is dependable. You don’t want your family to face uncertainty during a crisis.
• Higher Approval Chances: Insurers with strong CSRs are more likely to approve genuine claims swiftly, reducing the risk of rejections due to technicalities or delays.
• Confidence in the Brand: Companies with high CSRs tend to have better customer service, transparent processes, and stronger reputations in the market.
• Fewer Surprises: With a high CSR insurer, there’s less chance of last-minute issues during claim processing—something you definitely want to avoid.

Factors That May Affect CSR

While CSR is a good indicator, it can be influenced by several factors. Understanding these helps you see the full picture:

• Incomplete or Incorrect Paperwork: Claims may get delayed or rejected due to errors in documents or missing details.
• Undisclosed Information: Not revealing existing health conditions, smoking habits, or past medical history can lead to claim denials.
• Fraudulent Claims: Insurers reject claims that appear suspicious or don’t meet policy conditions.
• Claim Timing: Some claims are filed soon after the policy begins. These are typically investigated more deeply, especially within the contestability period (usually first 2 years).
• Policy Lapses: If premiums are not paid on time and the policy lapses, the claim may be considered invalid.

That’s why it’s not just about choosing an insurer with the best claim settlement ratio, but also about choosing the right coverage amount and ensuring you follow the right steps during purchase and beyond.

At Bandhan Life, with a claim settlement ratio of 99.66%, we honour every genuine claim that comes our way. Check out our bestselling term plan, iTerm Prime to experience efficient, hassle-free life insurance.

Frequently Asked Questions

1. What is considered a good claim settlement ratio?

A CSR above 95% is generally considered excellent. It means the insurer approves most claims they receive, indicating high reliability and customer focus.

2. Does a high CSR mean all claims are approved?

Not always. A high CSR increases the chances, but each claim is assessed individually. If there are issues like non-disclosure or policy lapses, even a high-CSR insurer can reject a claim.

3. How often is CSR data updated?

CSR figures are published annually by the Insurance Regulatory and Development Authority of India (IRDAI). These stats are based on the insurer’s performance for that financial year and are publicly available.