A Definitive Guide to Health Insurance Claim Settlement Ratio

Health Insurance Claim Settlement Ratio

Health insurance has become increasingly important for every household in order to handle soaring medical expenses. No matter whether you are a salaried or a non-salaried individual, it must be an essential part of your financial portfolio.

Under a health insurance plan, a customer needs to pay an annual premium, which would cover his unforeseeable medical expenses. However, before purchasing any such financial product, it’s natural for the customers to think whether the insurance company will settle the claim or not during the hour of emergency. This is where a health insurance claim settlement ratio comes into the picture.

The reliability of an insurance company can be easily figured out with the help of health insurance claim settlement ratio. It is considered to be the most important factor to choose a health insurance company.

If a company is having a higher claim settlement ratio, it means that the particular insurance company is settling a higher percentage of medical insurance claims. And it also means that if you make claim in future, the chances of its settlement would also be higher. The claim settlement ratio for various insurance companies is calculated and published annually by the Insurance Regulatory and Development Authority of India (IRDAI).

Distinctive Features of Health Insurance Claim Settlement Ratio

The health insurance claim settlement ratio is regarded as a metric which depicts the number of claims settled against the total number of claims made by an insurance company. It encompasses certain features which have been illustrated in the following list:

  • The ratio is expressed in the percentage form.
  • The ratio is computed on the basis of the claims settled in one financial year. A company will be assigned different ratios for every fiscal year.
  • The claim settlement ratio calculated is published for all insurance companies by the Insurance Regulatory and Development Authority of India (IRDAI).
  • The number of claims settled can be determined by the ratio. For example, if a company receives 65% as the claim settlement ratio, then it basically shows that the successful number of claims settlement done by the insurer is 65 out of 100 claimers of the insurance plan from the same insurance company. However, it does not portray the amount of claim settled by the insurance company.

Guide to select an insurer on the basis of CSR

To choose a health insurance plan from a particular company on the basis of the claim settlement ratio, an individual must look for the following points.

Higher Claim Settlement Ratio

A higher percentage of the health insurance claim settlement ratio represents the claim history of the insurer. If two insurance company have been offering similar benefits, but one of them has received 90% as claim settlement ratio while the other insurance company has received 50% as claim settlement ratio, then the buyer should purchase from the former company. Insurance companies with higher credentials provide assurance to its customers with valued products.

Consistency over the years

The consistency in the claim settlement ratio, over the years, indicates the reliability of a company. It is suggested to look for the consistency in the claim settlement ratio of the insurance company.

Other important points:

Although the claim settlement ratio provides an insight into the record of settlement of a company, it could be misinterpreted. You may look through the following points and keep them in mind before availing of a health insurance plan from an insurance company.

  • The ratio depicts the number of claims settled within a financial year. But, it does not mention the time taken by the insurance company to settle the claim amount.
  • Also, it does not indicate the number of pending claims with the insurance company.
  • It shouldn’t be considered as a perfect parameter to judge the life insurance companies. The buyer should also take into consideration the coverage, benefits, premium rates, claim services, and reputation of the company to choose the best health insurance policy. 

Importance of Health Insurance Claim Settlement Ratio

The claim settlement ratio is considered to be an important factor to opt-out the best healthcare insurance plan. The following are the key benefits enjoyed on availing an insurance plan while taking into consideration the claim settlement ratio.

Assurity of valued products

If an insurance company’s claim settlement ratio lies in the range of 80%-90%, then it is considered good to go for investment. Therefore, it is advised to the potential buyers to opt for the companies with a higher claim settlement ratio and avail services from them without much hassle.

Reflects Efficiency

The time taken by the company to settle the insured amount reflects its efficiency. The average claim settlement time taken by a good insurance company may vary from 20-30 days. It is, therefore, advised to check the average claim settlement time of the health insurer before zeroing on a particular healthcare product.

Shows Reliability

At times, during the hour of emergency, the insurance companies back off from providing the insured amount. To avoid such misery, opt for the insurance plan from a high claim settlement ratio insurance company.

To escape the hassles that you might have to face during the claim procedure, you may rely on the IRDA published ratings, which reflect the assurity and reliability over the company. It is advised to compare the claim settlement ratios of the insurance companies and then accordingly select the best healthcare product.

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