There are multiple factors that come into play while choosing the best term insurance plan for your needs. These include the reputation of the insurance company, the coverage amount, tenure, premium amount, riders and add-ons, and other flexible features. One more thing that you should not miss is the claim settlement ratio or CSR. It is an important metric which you should keep in mind while choosing term plans, though it should not be the sole deciding factor.
What is CSR?
The CSR or the Claim Settlement Ratio is a metric indicating the percentage of claims settled by an insurance company for a particular financial year relative to the total number of claims received. It gives you an idea of how many claims an insurer has settled historically, although it does not guarantee claim approval for an individual policy. Hence, to choose the best term insurance plan, you can shortlist from insurance companies with a relatively better track record of settling claims.
What a High CSR Means
You should note that choosing an insurance company with a higher claim settlement ratio is generally considered preferable, when assessed along with other important factors. What a high CSR can indicate is the following:
It suggests that the insurance company has settled a higher proportion of claims during that financial year. A CSR of around 95% or above is often viewed positively, although it should not be treated as a guaranteed indicator of claim payment for every policyholder.
You can get a sense of consistency if an insurer has maintained a relatively high CSR over several years. This may indicate stable claim-handling processes, though individual claim outcomes still depend on policy terms, disclosures, and underwriting conditions.
Insurers with consistently healthy CSRs may also have established claims processes and operational experience, although CSR by itself does not directly measure the insurer’s financial strength or claim settlement speed.
Some Tips that You Can Use
Here are some other things that you should always keep in mind when it comes to choosing the best term insurance plan by examining the CSR carefully:
Instead of focusing only on very high CSR numbers, consider insurers with consistently strong claim settlement ratios over multiple years.
Always check for consistency. Don’t rely only on one year’s data. Review the CSR trend of the insurer over the last 3–5 years to understand long-term patterns.
You may also look at the amount of claims settled, sometimes referred to as the amount settlement ratio (ASR). While CSR reflects the number of claims settled, ASR broadly reflects the proportion of claim amounts paid. However, ASR is not a standardised metric and should be used only as a supplementary indicator, not a standalone measure.
You should also balance the CSR with the solvency ratio. The latter is a vital indicator of the insurance company’s ability to meet its long-term financial obligations. The IRDAI (Insurance Regulatory and Development Authority of India) mandates a minimum solvency ratio of 1.5x, and insurers are expected to maintain this threshold.
You can find claim settlement data and solvency ratios in the annual disclosures published by IRDAI, such as its annual reports and insurance statistics, as well as on insurers’ official websites. Make sure that you evaluate CSR along with solvency ratio and other policy features while picking an insurance company. After all, the insurer should be capable of providing financial support to your family in an unfortunate scenario, subject to policy terms and conditions. CSR helps in understanding the insurer’s historical claim settlement performance, but it should always be considered alongside other critical factors.
