Health Insurance Claim Settlement Ratio – All You Need To Know Online
Health is an asset and more important than anything else. That is why we look for and invest in health insurance. It ensures that our medical emergencies do not turn into financial burdens, especially considering the rising costs of hospitalization in India.
However, it is important to choose the right health insurance policy. If you’re looking to purchase a policy, you must consider a number of factors. Some of the factors include the insurance claim process, quality of service, network hospitals, age limit, benefits, and bonus, among others. One factor that is often overlooked is the health insurance “claim settlement ratio”.
You may wonder why the Claims Settlements Ratio of your insurer is important, but here is why you should understand this aspect better.
Wondering what it is and why it matters? We’ll tell you all about it:
- What is the health insurance claim settlement ratio?
- How is the health insurance claim settlement ratio calculated?
- Why does it matter?
- What are the benefits of the health insurance claim settlement ratio?
- The reasons for the rejection of claims by insurance companies.
What is health insurance claim settlement ratio (CSR)?
Claims settlement Ratio (CSR) is the ratio of claims settled to claims made with an insurance company. It is a common metric that is used to rate insurance companies, which makes it one of the key parameters for customers to choose insurers.
Calculated at the beginning of every year, the Insurance Regulatory and Development Authority of India (IRDAI) publish the latest claim settlement ratios of IRDA registered insurance companies annually.
Here’s an example: If health insurer X settles 100% of the claims made by its customers during a particular year, its claim settlement ratio will be 100%. If the company settles 85% of claims made and rejects 15%, its claim settlement ratio is 85%.
How is health insurance claim settlement ratio calculated?
The calculations are not always so simple. Here’s a simple formula to calculate the claim settlement ratio:
(Total claims settled or paid) / (Total claims received + Outstanding claims at the beginning of the year) = Claim settlement ratio
Here’s an example that will help you understand the formula better.
A health insurance company received 1000 claims. Out of these claims, the company paid for 920 claims. 80 claims remained to be paid or were rejected. This is how we will calculate the claim settlement ratio with the formula: (920) / (1000) = 92%
Why does health insurance claim settlement ratio matter?
Here is why the Claims settlement Ratio matters to the insured and to the insurer.
There is fierce competition in the health insurance market. In India, the overall insurance penetration was 3.69% in 2017. This means there is a huge underserved market and immense potential for insurance providers. Insurers are trying to tap the market with innovative products, dynamic distribution channels, insurance offers and marketing tactics.
An opportunity for the insurer, but complexity for the customer.
For the customer, the plethora of health insurance plans and constant advertising leads to an overload of information and options to choose from. As a result, customers often find themselves lost in a sea of choices and many times, end up buying the wrong insurance product.
That is where information about a company’s claim settlement ratio can help.
Health insurance claim settlement ratio – benefits
We invest in health insurance because we want protection and assurance against medical emergencies. But numerous cases of non-settlement or partial settlements by insurance companies have left policyholders worried and unsure.
“Will our claims be settled in full? Will the insurance company reimburse the claims or reject them?”
This is when the claim settlement ratios of insurance companies could help insurance buyers make informed decisions. Here are some of its benefits:
- It gives a peek into insurance companies’ history and ability to settle claims
- Builds confidence and is confidence builder to a certain degree
- It can help customers decide between two insurance companies
- A good claim settlement ratio can relieve customers from worries
- Typically, 80% to 90% ratio is considered good. It reflects an efficient insurance company that demonstrates reliability.
Reasons for rejection of claims
Policyholders must understand that insurance companies do not and cannot reject claims without a valid reason. Quite often, it is the policyholders’ mistakes that lead to the rejection of claims by the insurer. Here are some common reasons:
- Filing of incorrect details by the policyholder
When filling the forms while purchasing a policy, it is important to fill in every detail correctly. Instead of having the insurance agent do it, customers must do it themselves.
- Hiding pre-existing health conditions
Be completely transparent when sharing details about yours and your family’s health history at the time of purchasing and renewing your health policy.
- Not following claims process properly
Every insurance company follows its guidelines for the claims settlement process. The policyholder needs to follow the process properly.
Looking to buy health insurance? Here are a few pro tips:
Always look at the claim settlement ratio: When looking to purchase a health insurance policy, always compare the claim settlement ratio of a couple of years of different insurance companies. Also, check the total number of claims it has processed and paid.
A bigger ratio does not mean a better company. A small or a new company may have had a small number of claims in a particular year, and hence shows a higher settlement ratio. Such a company may not be able to handle a large number of customers or claims. Look into all parameters and go with the company with the best consistent claim settlement ratio and look for some minimum scale in an insurer.
Consider the overall rating of the company. The claim settlement ratio alone doesn’t indicate the rating of a company. Insurance advisors often consider parameters such as the price of plans, product features, and claims, when rating insurance companies.
According to a report backed by Live Mint – Mint SecureNow Mediclaim Ratings, these were some of the best performing insurance companies in India in 2019. These companies have been rated after taking into consideration different plans offered, their prices, features and claims made and paid.
Here are the claim settlement ratios of some of the best insurance companies in India (2018-19).
HDFC Ergo Health Insurance – 90.32%
IFFCO Tokio – 92.66%
Star Health Insurance – 98.72%
Max Bupa Health Insurance – 91.2%
Religare Health Insurance – 97%
To cut a long story short, by now you must have understood why the claim settlement ratio of health insurance companies is not the last but the first information that you must look for. So the next time your insurance agent misses it out in his sales pitch, ask about the claim settlement ratio. Want to know more about purchasing health insurance? Read on.