The claims rate measures actual participation in a claims-made settlement, where members must submit a claim form to receive benefits. Rates vary widely and are frequently in the low single digits for consumer classes.
Direct payment structures avoid the issue entirely.
Alternative Names:
Claims-Made Rate, Redemption Rate
Why it Matters?
Low claims rates mean the defendant pays far less than the nominal settlement value, which is why claims-made structures are attractive to defendants and increasingly scrutinized by courts. Judges now routinely require reporting of actual claims rates before final approval and have rejected settlements where the rate revealed that class benefit was minimal relative to the fee award. Direct payment where member data exists avoids the criticism entirely.
Frequently Confused with
Related terms
Frequently asked questions
What claims rates are typical?
Why do courts scrutinize claims rates?
