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Why is the Claim Settlement Ratio Important for Buying Health Insurance?

Posted On : 20 July 2023, 8 Months Ago. Blog Total Read 221

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Customers understandably feel doubtful about whether or not an insurance provider will keep their side of the bargain in situations where their insurance is supposed to aid them. By spending on their health insurance premiums annually, customers want an assurance about whether their insurance provider will back them up during a crisis. One way to be assured about the likelihood that your insurance provider will settle your insurance claim is to lookat the insurance provider's annual claim settlement ratio.

What is it?

When a policyholder wants to use the medical services covered by their health plan, they must first submit a request to their insurer via the health insurance claim settlement process. With this, the policyholder may either obtain treatment without paying for it upfront or be reimbursed for any medical services they have used.

To put it briefly, a policyholder has two options for requesting payment, either ask their health insurance company to provide a cashless service or file a claim settlement form.

What is a Claim Settlement Ratio of Health Insurance?

CSR is known as the ‘claim settlement ratio.’ It is a ratio denoting the percentage of claims that are settled by an insurance company against the total percentage filed within a certain duration. As an example, let’s say a health insurance company has received around 100 claims in the last 3 months. Suppose the company has approved 70 of these 100 requests. Approval means the claims are settled. Hence, the claim settlement ratio is 70%. The remainder of the claims which have not been settled yet could be so for two reasons — they are either pending claims or they have been rejected as invalid claims by the insurance provider.

Most commonly there are two different claim ratios that you should know of before investing in health insurance. This includes the Claim Settlement Ratio and the Claim Incurred Ratio. In this article, we will be looking only at the significance of Claim Settlement. Here is why claim settlement ratio is important when it comes to health insurance.

Factors Important For Assessing Health Insurance Claim Settlement Ratio

Given below are the five important key factors for assessing the CSR of your health insurance.

Calculating CSR: During the Financial Year 2019–20, several health insurance providers have outstanding settlement ratios. Because of their high ratios, customers believe these insurance firms to be reliable enough. It can be calculated by the simple formula given on the respective site.
All Company Goods Are Measured: CSR is not only for health plans but also for all of the company's goods combined. As an example, the CSR of a life insurance business will take into account the claim settlement of the plans, ULIPs, etc., it provides. A single product that an insurance firm sells does not come with a CSR.
Consistency: An insurance provider's settlement ratio has to be reliable. This means that you must look at an insurance provider's ratio during the last five years before picking them to provide health insurance products. If it has a high percentage of claims resolved and has a track record of doing so, you should choose it. The ability of the insurance provider to resolve claims is shown by this.
Report from IBAI every year: Each year, the Insurance Brokers Association of India (IBAI) releases the Claim Settlement Ratio of all the private and public insurance carriers in its General Insurance Claim Insights Handbook For Policyholders. Everyone may see the report, which is posted on the IBAI website. While purchasing health insurance in India, you must follow the same process before settling on a provider business to work with.
The total number of claims received: The volume of claims a firm providing insurance receives for a fiscal year is another aspect to look at. This provides you with a rough idea of the insurance company's size and experience, which develops the trust of the customer.

Importance

There is a slew of reasons why it is important to consider CSR when buying any type of insurance.

1. Helps You Contrast Policies

.No matter if you are looking for individual health insurance plans or family health insurance plans, you should compare different policies before buying a policy. Many customers use the claim settlement ratio as a way to distinguish and compare different policies. One of the ways to get clarity about how likely an insurance provider is to back up one’s claims is to look at the claim settlement ratio for health insurance. Ideally, the customer desires that the provider is offering comprehensive protection with a high likelihood of settling health insurance plans claims. Hence, comparing the claim settlement ratio is vital for choosing a health insurance policy.

2. Allows Your Benefits to Matter

One of the biggest benefits of health insurance is when your policy offers a high claim settlement ratio. Tips to buying the best health insurance plan include looking for a comprehensive policy that offers benefits like home coverage, ambulance cover, cashless claims and other such inclusions. However, these benefits do not really mean much if the insurance provider is known to only settle about 50% of all claims coming in. Even if your insurance provider offers coverage against COVID-19, their claim settlement ratio should be high enough to secure you that your problems will be financially resolved by your insurance provider.

3. Value for Your Money

Ultimately, finding a good claim settlement ratio for health insurance is value for money. Every month, or year, you will be paying towards your health insurance policy. As long as your insurance provider's claim settlement ratio is over 90%, which is considered top of the industry standard, you can be assured that your money will not go to waste. As a policyholder, you can be reassured throughout your tenure of paying towards your policy rather than worrying about whether or not your claim will be settled.

How to Find an Insurance Provider with a Good Claim Settlement Ratio?

Now that we have established the importance of claim settlement ratio, here’s how you can discover policies with a good ratio. To discover the claim settlement ratios of a slew of insurance providers, you can take a look at the annual report provided by the IRDAI which summarises the performance of insurance companies in India for that year. The IRDAI refers to the Insurance and Regulatory Authority of India, and their annual reports allow you to discover where an insurance company stands when it comes to claim-settlement. The internet also enables you to seamlessly compare between different health insurance providers. The internet also enables you to seamlessly compare between different providers. If you are buying health insurance online, keep in mind that insurance providers are mandated to share their claims ratio on their official company website.

Conclusion:

In summary, a high claim settlement ratio helps in picking the ideal health insurance policy, allows you to make the most of your insurance, and assures you of your premiums’ worth. Ensure you use this parameter among others to find the health insurance suited to your needs.

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