How is it calculated? A claim settlement ratio highlights the proportion of insurance claims that an insurer successfully addresses in comparison to the total claims lodged by policyholders or their beneficiaries. This ratio is computed by dividing the total count of settled insurance claims by the overall number of claims received by the insurance company, then multiplying the result by 100. For instance, if an insurer receives 10,000 new claims within a specific year and resolves 9,800 of those claims while keeping the rest unresolved due to various reasons, the claim settlement ratio for that year would be calculated as (9,800/10,000 × 100), which equals 98%. As a general guideline, a claim settlement ratio exceeding 80% is deemed favorable. Leading insurance firms in the nation consistently maintain a claim settlement ratio surpassing 95%. Timely settlement is pivotal for insurance companies to build trust and long-term relation.