Average Claims Settlement Time
Average days from first notification of loss (FNOL) to claim settlement
What is Average Claims Settlement Time?
Average claims settlement time is the average number of days from a claim first being reported to it being settled. It shows how quickly an insurer resolves claims.
Fast, fair settlement is a major driver of customer satisfaction and retention in insurance.
How this KPI is measured
- Function
- Operations & Supply Chain
- Sub-function
- Claims Management
- Industry
- Insurance
- Type
- Lagging
- Impact
- Efficiency
- Unit
- days
- Measurement frequency
- Monthly
- Formula
- Sum of days from FNOL to settlement / Number of claims settled
How to calculate it
Add up the days from first notification of loss to settlement across claims settled, and divide by the number of claims settled.
For example, if 100 claims took a combined 2,500 days to settle, the average is 25 days.
Split by claim type and complexity, since a simple claim and a complex one differ greatly, and also look at the longest cases.
Where it is used
Improving service
Speed up settlement.
Managing workload
Find bottlenecks.
Meeting regulatory expectations
Show fair handling.
How to improve it
Tips and common mistakes
- Speed must not come at the cost of fairness or accuracy.
- Split by claim type.
- Follow the regulatory rules on handling times.
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