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Health Insurance Claim Settlement Ratio
Apr 15, 2021

Health Insurance Claim Settlement Ratio: A Complete Guide

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 a 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%.

Types of Health Insurance Claim Ratio

There are three types of health insurance claim ratio that you should know:
  • Claim settlement ratio
  • Claim repudiation ratio
  • Claim pending ratio

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.

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 hospitalization expenses or unfurnished doctor’s certificates.

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.

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.

Required Documents For Claim Settlement

To settle a claim settlement ratio health insurance, ensure you have the following documents: Claim Form: This form must be duly filled out and signed by the insured individual, providing all necessary personal and claim-related information. Original Policy Document: A copy of the health insurance policy to verify your coverage. Original Registration Book/Certificate and Tax Payment Receipt: Required particularly for vehicle-related health claims, verifying the insured vehicle's registration and tax status. Previous Insurance Details: Including the policy number, insuring office or company, and the period of the previous insurance coverage. All Sets of Keys/Service Booklet/Warranty Card: Necessary for claims involving insured vehicles or specific items to confirm ownership and maintenance records. Make sure all documents are complete and authentic to avoid delays or rejections in the insurance claim settlement process.

How to Check Health Insurance Claim Settlement Ratio

To check the health insurance claim settlement ratio (CSR), follow these steps: Visit the IRDAI Website: The Insurance Regulatory and Development Authority of India (IRDAI) publishes an annual report with the CSR of all health insurance companies. Download the Report: Locate and download the latest IRDAI annual report in PDF format from their official website. Review the CSR Data: Go through the report to find the claim settlement ratios of different insurers. Compare Insurers: Higher CSR indicates better chances of claim approval. Make a list of insurers with high CSR. Analyse Coverage: Compare the health insurance plans of companies with high CSR to ensure they meet your coverage needs.

Where to Check The Claim Settlement Ratio of a Health Insurance Company?

To check the claim settlement ratio (CSR) of a health insurance company, refer to the annual report released by the Insurance Regulatory and Development Authority of India (IRDAI). This report provides detailed information on the term insurance claim settlement ratio of various health insurers. You can access it by visiting the official IRDAI website and downloading the most recent report. Additionally, you can compare the CSRs of different health insurance companies through various online insurance platforms and financial advisory websites. A high CSR indicates the insurer's reliability in settling claims, making it an essential metric when choosing a health insurance policy. Comparing CSRs alongside coverage benefits ensures you select a plan that offers both financial security and efficient claim processing.

How is the Health Insurance Claim Ratio Calculated?

The best claim settlement ratio in health insurance is a crucial metric indicating the percentage of claims an insurance company pays out. It is calculated using the formula: 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 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.

Types of Claim Settlement Processes

Different types of claim settlement processes are mentioned below:
Claim Settlement Process Cashless Claim Settlement Reimbursement Claim Process
Step 1 Fill out the pre-authorisation form at the insurance desk and send it to the claim management team Submit the claim form along with the required documents
Step 2 Receive approval letter once the claim is verified Obtain an approval letter from the claim management team
Step 3 Respond to queries from the claim management team Respond to queries raised by a claim management team
Step 4 File reimbursement claim request if cashless claim request is denied If a claim is rejected, the claims team will contact and share the reasons of the rejection
Additional Information Inform the claims team within 24 hours of an emergency hospitalisation or 48 hours before a planned hospitalisation Inform claims team for smooth settlement, adhere to timelines

FAQs

Which health insurance has the highest claim-settlement ratio? 

Determining the health insurance company with the highest claim-settlement ratio involves considering various factors. Bajaj Allianz General Insurance is one such company known for its reputable claim settlement record.

What is a good claim settlement ratio? 

A good claim settlement ratio in health insurance typically exceeds 80%. However, it's essential to assess other factors alongside CSR, such as customer service quality and plan terms, before choosing an insurer.

Which insurance company is best for claim settlement? 

Several insurance companies excel in claim settlement, including Bajaj Allianz General Insurance. However, the "best" insurer depends on individual needs, coverage requirements, and budget considerations.

How does the insurance claim settlement process work for health insurance?

The insurance claim settlement process for health insurance involves notifying the insurer of the claim, submitting required documents (e.g., medical reports, and bills), and awaiting approval. Once approved, the insurer disburses the claim amount.

What should policyholders know about insurance claim settlement?

Policyholders should understand their policy's claim settlement process, including documentation requirements, exclusions, and timelines. It's crucial to keep all relevant documents ready and communicate promptly with the insurer.

How long does it take to settle health insurance claims? 

The time taken to settle health insurance claims varies depending on factors like documentation completeness, the complexity of the case, and the insurer's efficiency. Typically, insurers aim to settle claims within a reasonable timeframe, often within a few days to weeks.   * 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.

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