IRDAI Chairman: Check Actual Payouts, Not Just Claim Settlement Ratio, Before Buying Insurance

IRDAI's chairman wants people to look at actual payouts. A high claim settlement ratio alone isn't enough, as reported by BusinessLine.

For you, that means one number shouldn't decide your policy. Check how much money an insurer really pays, and how fast.

Key takeaways

• The claim settlement ratio counts claims, not the rupees paid out.
• An insurer can settle most claims and still pay less than you expected.
• Look at payout amounts, waiting periods and exclusions before you buy.
• Read the policy wording closely, because that's where payouts get cut.
• Use the ratio as a starting point, not the final answer.

What is the claim settlement ratio?

The claim settlement ratio is easy to understand. It shows the share of claims an insurer settled out of those it received. If an insurer got 100 claims and settled 95, the ratio is 95%. Many buyers treat it like a trust score. Insurers and comparison sites show it everywhere. But it counts claims, not money. It also doesn't say why some claims were rejected or reduced.

Why actual payouts matter

A claim can count as settled and still pay less than you hoped. Part of a hospital bill may be cut. Some items may be left out of cover. A family may also wait a long time for the money. Think of exam marks. Passing 98 papers means little if each one scored low.

According to the reporting, the IRDAI chairman's point is that the real test is what reaches the policyholder. We only have the headline, so we won't guess at more detail.

A simple example with numbers

Here's a made-up example to show the gap. Both insurers got 100 claims of ₹5 lakh each.

Insurer	Claims settled	Paid per claim	Total paid out of ₹5 crore
Insurer A	98 of 100 (98%)	₹3 lakh	₹2.94 crore (59%)
Insurer B	90 of 100 (90%)	₹4.5 lakh	₹4.05 crore (81%)

Insurer A looks better on the ratio. Yet its customers got far less of what they claimed. Insurer B settled fewer claims but paid more money. Real insurers won't look this neat, but the idea holds.

What to check before you buy

Use this short checklist when you compare policies:

1. Ask how much of a claim the insurer usually pays, not just how many it settles.
2. Read the exclusions. These are things the policy will never pay for.
3. Check waiting periods, sub-limits and co-pay. Co-pay is the share of the bill you pay yourself.
4. Look at how long claims usually take to settle.
5. Read complaint trends and the public disclosures insurers must share.

Who is affected

Anyone buying health, term life or motor cover should care. First-time buyers are most at risk, because they lean on one headline number. Borrowers should care too. Lenders often offer insurance along with a home loan or a personal loan. Check what that cover really pays before you accept it.

What to do now

You don't need to change anything this week. If you already hold a policy, re-read the exclusions and sub-limits. Note the claim process and the papers you'd need. Keep your policy wording where your family can find it.

If you're about to buy, compare payout terms side by side. Don't pick an insurer on one ratio alone. Follow our news hub for updates on how this stance develops.

Frequently asked questions

Does a high claim settlement ratio mean a good insurer?

Not always. It shows how many claims were settled, not how much money was paid. Use it alongside payout terms.

Where can I find an insurer's payout details?

Insurers publish public disclosures, and the regulator's site carries industry information. Ask your insurer for the policy wording in writing.

Should I switch my policy because of this?

No need to rush. First read your exclusions and limits. Switching can reset waiting periods, so weigh that with care.