You must have heard the term ‘Claim Settlement Ratio’ numerous times with people stressing on the importance of this number. But what does it mean and why is it essential? While purchasing health insurance in India, you will find numerous lucrative plans available in the market but picking one amongst them can be tough. Claim Settlement Ratio is a vital deciding factor to help you buy a suitable health plan. So, let’s understand the health claim settlement ratio in detail.
What Is Claim Settlement Ratio?
Claim Settlement Ratio or CSR is a ratio that tells you the percentage of claims paid out by an insurance company. It is calculated by taking the total number of claims settled by the insurer against the total number of claims filed in that particular financial year. This value can be used to determine the probability of your claim getting settled in the future and therefore, insurers with higher CSR are preferred. For example, if 100 claims are filed out of which 80 are settled, then the CSR would be 80%.
There are three types of health insurance claim ratio that you should know:
- Claim settlement ratio
- Claim repudiation ratio
- Claim pending ratio
As you what CSR is now, let’s look at the formula of health insurance claim settlement ratio,
CSR = (Total no. of claims settled) / (Total no. of claims reported) + No. of outstanding claims at the start of the year - No. of outstanding claims at the end of the year
What Is Considered as a Good Claim Settlement Ratio?
Mostly a health insurance claim ratio of more than 80% is considered as good but CSR should not be the only deciding factor. Also, there are many other aspects that play a vital role in getting suitable health plans. Hence, it is always recommended to go through the customer services offered by various insurers and the terms and conditions of the plan. You can also contact any friends or relatives who have bought medical insurance
to reaffirm your research before finalising the policy.
While assessing the health insurance claim settlement ratio, you might also come across terms such as repudiation or pending ratio. Let’s understand these terms better:
Claim Repudiation Ratio
This number tells you the percentage of claims rejected by the insurance provider. For example, if the ratio is 30%, it means that out of 100, only 30 cases were rejected. The ratio can be calculated by taking the total number of claims rejected against the total number of claims filed by policyholders. Now, the reason for claim rejection can be claims that fall under the exclusions, pre existing diseases
not covered in your policy, false claims, failure to intimate the insurer on time and many others.
Claim Pending Ratio
Such a health insurance claim ratio reflects the number of claims that are pending and haven’t been accepted or rejected. For example, if the claim pending ratio is 20%, then out of 100 claims there are 20 cases which are pending. This value can be calculated by taking the total number of outstanding claims against the total number of claims filed by policyholders. There can be many reasons as to why some claims are pending. Some of them can be due to ongoing validation of hospitalisation expenses or unfurnished doctor’s certificate.
Importance of Claim Settlement Ratio
Health insurance Claim Settlement Ratio is crucial for policyholders as it reflects the likelihood of your claim getting settled. When you purchase a policy, the objective of this investment is to secure your loved ones from a medical emergency. But if your insurance provider doesn’t pay out during your time of need, the entire point of having insurance goes in vain. This is why CSR can be a good indicator of insurers who are willing to pay-out when the time comes.
Lastly, we recommend going through the insurance claim process
for your policy in order to file claims efficiently when needed while avoiding the possibility of rejections.