Agent Showed You "99% Claim Settlement Ratio"? Stop! Why 'Amount Settlement Ratio' (ASR) Is the Only Number That Matters for Term Insurance

You are about to buy a Term Insurance policy.
The agent proudly shows you a brochure: "Look, Sir! Our Claim Settlement Ratio (CSR) is 99.2%. We are the best!"

You feel reassured and reach for your checkbook.
Wait. Put the pen down.
That 99% might be hiding a dirty secret. If you are buying a high-value cover (like ₹1 Crore), CSR is inherently flawed. You need to look at a significantly more honest metric: Amount Settlement Ratio (ASR).

Disclaimer: Data is based on IRDAI Annual Reports (typically released with a 1-year lag). Past performance is a good indicator but not a guarantee of future settlement.

Agent Showed You "99% Claim Settlement Ratio"? Stop!

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1. The "CSR" Trap (The Numbers Game)

Claim Settlement Ratio (CSR) is calculated based on the number of policies settled.

⚠️ How Insurers Can "Game" the System

Imagine an insurer receives 100 claims:

• 99 Claims are small (₹2 Lakhs each). The insurer pays them all instantly.
• 1 Claim is huge (₹1 Crore). The insurer rejects it to save money.

The Result:
They paid 99 out of 100 claims.
Their CSR is 99%. (Looks amazing on a brochure!)
But the family who desperately needed the ₹1 Crore got ₹0.

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2. The "ASR" Truth (The Money Game)

Amount Settlement Ratio (ASR) is calculated based on the total value (money) settled vs. claimed.

Let's look at the same example above:

• Total Amount Claimed: (99 x ₹2L) + (1 x ₹1 Cr) = ₹2.98 Crores approx.
• Total Amount Paid: (99 x ₹2L) = ₹1.98 Crores.
• The ASR Calculation: ₹1.98 Cr / ₹2.98 Cr = 66%

The Reality:
CSR says 99% (Success). ASR says 66% (Failure).
Which number reveals the company's true intention?

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3. Why This Matters for Term Insurance

In Health or Car insurance, claims are usually small and frequent.
But Term Insurance is binary. You are either alive, or your family needs the full ₹1 Crore.
If an insurer has a high CSR but a significantly lower ASR, it implies they are happily settling small legacy claims but looking for excuses to reject the big ticket ones.

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4. Who Has Good ASR? (The Gold Standard)

You want an insurer where the CSR and ASR are consistent (within a 5% gap).

• LIC (Life Insurance Corporation): Historically maintains a very high ASR due to government backing and lenient payouts.
• Top Private Players: HDFC Life, ICICI Prudential, Max Life, and Tata AIA consistently maintain ASRs above 90-95%, signaling they honor large claims.

Red Flag: Be cautious of newer digital-first insurers if their CSR is 98% but ASR drops below 85%. This gap is a warning sign of aggressive underwriting or rejection of early claims.

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5. How to Check It Yourself

Don't rely on brochures. Go to the source.

1. Search for "IRDAI Annual Report [Previous Year]" on Google.
2. Open the PDF and search for the "Death Claim Settlement" table (usually near the end).
3. Compare two columns: "Benefit Amount Paid" vs "Benefit Amount Claimed".

Trust, But Verify

When you buy a policy, you are buying a promise for your family's future.
A 99% CSR is good, but it’s not enough. Ensure the company has the financial intent to pay the big check when it matters.
Look for the "Double 90" Rule: CSR > 98% and ASR > 90%. That is the mark of a reliable partner.

Action Plan:

1. Shortlist 3 insurers for your Term Plan (e.g., HDFC, Max, Tata AIA).
2. Google "[Insurer Name] Amount Settlement Ratio 2024-25".
3. If the ASR is significantly lower than the CSR (a gap of >7%), ask the agent "Why is there a discrepancy in your amount settlement?" or move to the next insurer.

Helpful Resources:
IRDAI Official Annual Reports (Latest Data)
Beshak: CSR vs ASR Explained