Why Claim Settlement Ratio Matters When Choosing an Insurance Company

When it comes to making long-term financial decisions, such as buying health insurance, a good amount of research is necessary. One should look at various factors before finalising a health insurance plan and the insurer. To evaluate the insurer, you should look at their credibility and reputation mainly. One legitimate factor that can help you evaluate them in these regards is the claim settlement ratio. In simple terms, this ratio may tell you how likely your claims are to be settled with a particular insurance company. * Hence, it should be given due importance. Let’s learn more about the health insurance claim settlement ratio .

What Is the Claim Settlement Ratio (CSR)?

Essentially, the CSR is a ratio indicating the number of claims an insurance company settled as compared to the claims they received in a year. The ratio is usually expressed through a percentage. The formula for calculating the CSR is as follows: (Total number of claims settled/Total number of claims received) x 100 = CSR  Let’s understand the concept of health insurance claim settlement ratio with the help of the following example: XZY Insurance Company Ltd. received a total of 1000 claims in the year 2020-2021. Out of the 1000 claims, XZY settled a total of 950 claims. Thus, the claim settlement ratio of XZY Insurance Company Ltd. shall be computed as: (950/1000) x 100 = 95%  So, the claim settlement ratio of XZY Insurance Company Ltd. was 95% for the year 2020-21.  Usually, a CSR of 95% is considered good in the insurance sector. The higher the claim settlement ratio, the better it may be for the policyholder. This is because it shows the insurer’s dedication towards settling the policyholder’s claims. A higher CSR can mean that the insurer makes efforts to settle claims and compensate the claimants.

Why Is the Claim Settlement Ratio Important When Buying Health Insurance?

Now that you may have a basic understanding of the CSR, let us look at why it should be considered when buying health insurance.

-  It helps you compare insurance companies 

Comparing health insurance policies before finally buying the right one is important. It ensures that you get the best features within your budget. The claim settlement ratio of an insurance company can tell you how reliable the insurance company is. Thus, when you compare the CSR of one company with the other, you can get a clearer understanding of where your claims have a higher chance of being settled.

-  It offers you peace of mind 

When there is a medical emergency, the last thing you would want is for your health insurance claim to be rejected and for you and your loved ones to bear the financial burden of the situation. Aside from the emotional stress of the medical emergency, the need of having to pay for hefty medical expenses may also lead to financial worries. If you opt for a medical insurance provider with a high claim settlement ratio, the chances of your claim being rejected are lesser. This higher likelihood of claim approval can prove a positive sign and help you relieve worries related to finances during medical emergencies.

-  It helps you get better value for money 

When you buy health insurance, the main intention you may have in mind would be to provide financial protection to your family against medical events. You are willing to pay premiums every year just to ensure that, when the time comes to raise a claim, it would be duly settled, and financial compensation would be quickly provided. However, if the chances of your claims being settled are low, following through with the health insurance process and paying premiums may not seem to be highly worth it. You may not get the value for your money that you may be looking for. Hence, it can be beneficial to look at the CSR and consider its value when buying health insurance.

Is the Claim Settlement Ratio Enough for Evaluation?

There are many other factors that can determine how reliable an insurance company is and how beneficial your insurance plan is. You must also take factors such as the coverage of the plan, the number of network hospitals with the insurer, the customer services provided by the insurer, and so on, into consideration. For instance, you must check how easily you can know your health insurance claim status after you have raised a claim. Moreover, the claim settlement ratio may be low or high due to various other reasons. For instance, if a natural disaster were to occur and many policyholders were to raise claims at once, the claim settlement ratio would increase considerably. In normal situations, the case may be different. Hence, one must have a comprehensive outlook when considering the claim settlement ratio and buying health insurance.   * Standard T&C apply. Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.