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15 Nov 2021
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Overview

Choosing the right health insurance plan is crucial. But before you purchase an insurance policy, it is essential to take into account a variety of different factors, like the amount of coverage you need, the period for which you will need the coverage, and even the additional riders you want to purchase, if any. It is also extremely important to choose the right health insurance provider. To evaluate if a health insurer is the right option for you, you can take a look at different factors like the insurance company’s history, the quality of their services, the customer support they offer, and even reviews from existing customers. Besides these factors, there is one metric that can give you a great deal of insight into how credible the insurance provider is, and how likely they are to settle your claims promptly, the Claim Settlement Ratio (CSR). 

What is a Health Insurance Claim Settlement Ratio & How is it Calculated?

A claim settlement ratio is an important metric that lets you understand how reliable a health insurance companies is, with regards to claim settlements. It is simply the percentage of claims that a health insurance provider settles each year, out of the total claims that they receive. The claim settlement ratio is typically calculated for each financial year. So, when you are buying your insurance policy, make sure that you take a look at the insurance provider’s most recent claim settlement ratio to get a better idea of their credibility.

Formula to Calculate the Claim Settlement Ratio

So, now that you know what the claim settlement ratio is, let’s find out how you calculate it. But is there a formula that’s used to calculate this metric? Well, since this is essentially a ratio, there is a universal formula that is used to compute the CSR. 

Take a look at the claim settlement ratio formula below:

Claim Settlement Ratio =

(Total number of claims approved ÷ Total number of claims received) x 100

The claim settlement ratio is always expressed as a percentage. So, it effectively tells you the percentage of claims settled by the insurance company. Claim settlement ratio of insurance companies is calculated using the formula given above. To better understand this, let’s take up an example to calculate the CSR. Consider the following data. 

Let’s say an insurance company receives 1 lakh claims during a financial year. Of these, they settle 95,000 claims during the year. Given this data, here is how the claim settlement ratio will be calculated.

Claim Settlement Ratio

= (Total number of claims approved ÷ Total number of claims received) x 100

= (95,000 ÷ 100,000) x 100

= 0.95 x 100

= 95%

So, as you can see, this insurance company’s claim settlement ratio for the given financial year is 95%.

What is a Good Claim Settlement Ratio?

When it comes to the claim settlement ratio, the general thumb rule is that the higher the ratio, the better it is for you. A higher ratio indicates that the insurance company promptly settles a majority of the claims they receive, and this is always a relief for you and your nominees.

On the other hand, a lower claim settlement ratio indicates that a larger portion of the claims received remain unapproved or unsettled. This could be because the claim applicants provided insufficient information, or because some of the claims may have been fraudulent. However, it could also point to the insurer’s inability to settle claims on time. So, it is always advisable to opt for an insurance provider with a higher claim settlement ratio. A claim settlement ratio of over 85% is considered good.

Why is a Claim Settlement Ratio Important?

As a buyer, you may be wondering why this ratio is so important in the decision-making process. The claim settlement ratio is a vital factor that helps you pick the right health insurance provider. After all, the reason you Health Insurance or any kind of insurance is so that you can rely on the financial cushion the policy offers, isn’t it? So, when the insured incident occurs, you need to have a reliable insurer who can step in and take care of the financial payouts promptly.

For instance, if you have a health insurance plan, and you unexpectedly meet with an accident that requires an extended stay at the hospital. You are not worried about the cost of hospitalisation because your insurance plan covers these expenses. So, you reach out to your insurer and raise a claim as per the due procedure.

The bottom line is that the claim settlement ratio is important because it helps you choose an insurer you can rely on. So, when you are shopping for an insurance plan, you can shortlist insurers who offer plans that meet your requirements. Then, from among those options, you can select the insurance provider with the highest claim settlement ratio.

The bottom line is that the claim settlement ratio is important because it helps you choose an insurer you can rely on. So, when you are shopping for an insurance plan, you can shortlist insurers who offer plans that meet your requirements. Then, from among those options, you can select the insurance provider with the highest claim settlement ratio.

How Long Does it Take to Get the Claim Payout?

This is quite subjective, and it depends on a number of factors such as the nature of the claim, the health insurance provider’s terms and conditions, the paperwork you submit and the accuracy and completeness of the details you submit to your health insurer.

Typically, however, most health insurance providers settle their claims and make the payouts within a week of receiving all the relevant documents. That said, it generally does not take more than 30 days for the claim payouts to be made.

What are the Steps for Registering a Claim?

The steps involved in registering a claim with your insurance provider may vary from one insurance company to another. They also depend on whether you opt for a cashless claim settlement or a reimbursement claim.

Broadly speaking, these are the steps involved in both these cases.

 

Option 1: In case of a cashless claim settlement

  1. Visit a network hospital associated with your insurance provider

  2. Submit the details of your policy and fill in the pre-authorization form

  3. The insurer then verifies your form, while the hospital is intimated about your policy details

  4. After the course of your treatment is over, at the time of discharge, the network hospital submits the bills and the discharge papers to your insurer

  5. The insurer then directly settles the bill amount with the hospital, after accounting for any deductibles or copayments.

Option 2: In case of a reimbursement claim

  1. Here, after you have been discharged, you need to submit the hospital bills and other medical documents as needed.

  2. Then, the insurer will verify the details and reach out to you in case they need any additional information.

  3. Once all the paperwork is submitted, the insurer assesses your claim request.

  4. If it’s found satisfactory, the insurer will reimburse the claim amount to you as per the terms and conditions of your health insurance plan.

What are the Mandatory Documents Required for the Claims Process?

Like the steps involved in registering a claim, the documents you need to submit may also vary slightly from one health insurance provider to another. However, to raise a claim with your health insurer, these are the mandatory documents that are generally required:

  • Duly filled claim form

  • A medical certificate from a qualified medical professional

  • The original copy of the discharge summary provided by the hospital

  • The prescriptions provided during the course of treatment

  • The cash invoices given by the pharmacies and hospitals involved

  • An investigation report by the concerned doctor

  • A copy of the FIR or the Medico Legal Certificate (MLC) in case of accidents

The Claims Settlement Ratio of Different Health Insurance Providers in India

The Insurance Regulatory and Development Authority of India (IRDAI) is the apex regulatory body for insurance in the country. Every financial year, the IRDAI calculates and issues the claim settlement ratio for each insurance company in India.

This is a reliable source of information for anyone who is looking for information on the CSR of health insurance providers in India. Here is a closer look at the claim settlement ratio by IRDA for health insurance companies as issued by the IRDAI for 2019-20. 

Health Insurance Companies

Claims O/S at the beginning of 2019-2020

Claims booked during 2019-2020

Claims paid during 2019-2020

Claim Settlement Ratio

(% of claims paid settled within 3 months)

Care (Religare)

127,639

1,036,711

980,518

100.00%

Apollo Munich

21,446

475,055

434,133

99.99%

Manipal Cigna

1,637

223,936

193,395

99.96%

Max Bupa

1,983

145,353

132,750

99.91%

Star Health

42,280

1,092,692

892,369

99.90%

HDFC Ergo

120,286

1,481,221

1,446,143

99.80%

Edelweiss General

11

9,197

7,561

99.72%

Go Digit

1,612

194,499

163,170

99.65%

Aditya Birla

3,914

99,554

78,395

99.36%

Navi General

287

12,626

10,453

98.70%

Kotak Mahindra

1,383

50,083

39,797

98.62%

Bajaj Allianz

170,564

5,766,512

5,334,364

98.61%

Reliance

258,915

1,853,280

1,608,766

98.16%

Liberty

11,557

243,275

209,400

97.84%

SBI General

31,047

765,530

712,931

97.84%

Royal Sundaram

41,143

596,284

569,167

97.75%

Reliance Health

8

818

348

97.13%

ICICI Lombard

196,322

1,894,100

1,680,709

96.93%

Magma HDI

8,099

78,272

65,060

95.40%

Acko

2,544

195,695

147,942

93.49%

Future Generali

31,472

260,370

232,610

93.34%

Tata AIG

51,211

1,220,302

1,074,652

92.82%

Oriental

250,810

3,571,151

3,497,321

92.71%

Bharti AXA

29,208

308,361

273,481

92.17%

New India

309,506

5,812,400

5,730,150

91.99%

Cholamandalam

52,686

297,618

255,007

91.47%

United India

660,234

4,866,214

4,470,407

89.18%

Shriram General

56,343

250,572

203,841

87.53%

AIC

4,536,017

12,997,531

8,643,927

83.99%

IFFCO Tokio

72,712

1,097,565

1,082,533

81.67%

ECGC

592

2,006

553

53.35%

National

520,594

5,692,728

4,996,054

45.37%

Raheja QBE

489

862

416

30.29%

Universal Sompo

11,199

185,344

157,571

22.14%

Summing up

The claim settlement ratio is an important factor to take into account when you are shopping for an insurance plan. Remember to look at the most recent numbers to check how reliable the insurer is with regards to claim settlement. In addition to this, keep in mind that you also need to consider other factors like the plan’s benefits, its coverage, the policy term and the premium.

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