What do you mean by insurance?
Insurance is a way to manage your risk. When you buy insurance, you purchase protection against unexpected financial losses. The insurance company pays you or someone you choose if something bad happens to you. If you have no insurance and an accident happens, you may be responsible for all related costs.
While taking a life insurance policy, there are many people who do not know about the claim settlement ratio or CSR of the life insurance company. However, it is very important for the policyholders to know this. This shows the percentage up to which the insurance company has settled the claim.
Actually, the claim settlement ratio or CSR is known from the total claim settled or given by a life insurance company during a financial year. To calculate this, the total claim made is divided by the total claim settled.
For example, if a life insurance company has 100 death claims and out of them, that company has settled 93 claims, then the claim settlement ratio of that company will be 90 per cent and claim rejection rate will be 10 per cent.
Methods of insurance
According to the study books of The Chartered Insurance Institute, there are variant methods of insurance as follows:
Co-insurance – risks shared between insurers
Dual insurance – having two or more policies with overlapping coverage of a risk (both the individual policies would not pay separately – under a concept named contribution, they would contribute together to make up the policyholder's losses. However, in case of contingency insurances such as life insurance, dual payment is allowed)
Self-insurance – situations where risk is not transferred to insurance companies and solely retained by the entities or individuals themselves
Reinsurance – situations when the insurer passes some part of or all risks to another Insurer, called the reinsurer
Choose a company with more than 97 percent CSR
Before buying a policy, choose an insurance company that has the best claim settlement ratio. Before choosing the right insurance company, check their CSR. The insurance regulator releases the claim settlement ratio data every year.
Higher the claim settlement ratio, better will be the claim record of the company. A claim settlement ratio of more than 97 per cent is considered safe. You can check the credibility of your insurance company through the claim settlement ratio.
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