Insurance companies have many different factors they consider, which help them determine rates and who can be accepted as insurable. Items such as the vehicle being insured, its value, the driver, his or her age, and the number of claims a person has submitted, all play a vital role in the process of developing an insurance policy. However, certain back-office processes also affect the world of auto insurance, including claim settlement ratio. This insurance term is used across insurance industries, whether it is dealing with life insurance, health insurance, homeowner’s insurance, or automobile insurance. It indicates the willingness of the insurer to settle claims as they are brought through the office, with higher ratios indicating a greater likelihood a claim will be settled. With auto insurance, this concept can directly affect motorcycle riders and their ability to obtain affordable coverage.

 

By Definition

 

Claim settlement ratio, by definition, is a simple mathematical equation. This equation takes into account the number of claims an insurance company receives and devised it by the number of claims settled. This is used to show profitability for the insurance company. However, more importantly, this is used to demonstrate the trustworthiness of the company in the eyes of the consumer. The higher the ratio, the more you can trust your insurance provider to cover your claims.

However, may insulate the insurance company may be less likely to take on high-risk drivers. An insurance company with a high claim settlement ration may mitigate risk by being extremely selective with the clientele they accept. As a result, they may only accept drivers that are low risk a possibly willing to pay a higher premium to allow them to pay more claims.

A company’s claim settlement ratio is a direct indication of whether the company is an easier company with which to do business. Companies with a high settlement ratio are typically seen as companies that are quite easy to submit a claim with. The representatives are trained to work with the clientele to find a good solution for the insured and help make that person as whole as possible.

 

The Impact

 

A high claims settlement ratio can have both a positive and negative impact for motorcycle insurance purposes. Regarding the positive impact, a high claims settlement ratio means that a company settles the majority of the submitted insurance claims. Therefore, a motorcycle claim is more likely to be paid through an insurance company that has a high settlement ratio.

However, there is also a negative impact related to using a company with a high settlement ratio. Companies with high settlement ratios are more selective with the policies they write. Motorcycles are considered high-risk vehicles when on the road. They have fewer safety features than many automobiles. Also, the drivers have a higher risk of serious injury if an accident occurs. In contrast, the cost to replace a motorcycle is considerably less than the cost to replace a car or SUV.

As a result, companies with high settlement ratios will scrutinize your driving record and other factors before approving you for motorcycle insurance, in order to mitigate risk. You may be turned down by a company if you are considered a higher risk motorcycle driver with other claims on your record. A company with a slightly lower claim settlement ratio may still be trustworthy, but more willing to take the risk as it does not need to mitigate as much risk.

 

The Outcome

 

A company with a high settlement ratio will likely be more willing to settle your motorcycle claim when submitted. This can help give you more peace of mind when driving your motorcycle should an incident occur. You will likely have fewer issues in getting a claim settled and having your life made whole.

However, if you are a motorcycle driver that has a sketchy driving record or poor credit, you may not be approved by the top companies with high claim settlement ratios. You may have to settle for a company with a lower claims settlement ratio to obtain the state minimum coverage of motorcycle insurance. This does not mean you will have a subpar policy. It simply means that the claims will have slightly different criteria to be settled.

To learn more about claim settlement ratios and motorcycle insurance contact our team at www.protectiveagency.com or call (877) 739-9367. Our licensed insurance agents will be happy to answer any questions you have.