How to Calculate Claim Ratio in Health Insurance?
What is health insurance

Livewell: Health Insurance & Wellness Blogs | Max Bupa

How to Calculate Claim Ratio in Health Insurance?

Max Bupa

02 November 2020

The importance of buying a comprehensive health insurance plan is pretty clear in 2020. With enhanced features and dozens of insurers to choose from, consumers are now spoilt for choices. Comparing health insurance plans is no longer a luxury, but a necessity for today’s consumer. To simplify this process, insurers have developed parameters to compare health insurance plans against. One such parameter is known as the ‘Health insurance claim ratio,’ or simply ‘claim settlement ratio (CSR).’ What is this parameter and how can it help?


What is the health insurance claim settlement ratio (CSR)?


A health insurance claim settlement ratio is the percentage amount of claims that the health insurer has accepted as valid and settled against the total number of claims filed from its consumers in the same timeframe. This number is very helpful in comparing policies. The higher a claim settlement ratio of a company, the more claims they accept as valid. The IRDAI (Insurance Regulatory and Development Authority of India) calculates the claim settlement ratios of all registered insurance companies annually and publishes them on their own website. A claim settlement ratio of 80% to 90% is considered good, while anything above 90% is ideal. 


How is health insurance claim ratio calculated?


The formula to calculate the claim settlement ratio is pretty straightforward. Be it life insurance, health insurance, or more, this calculation remains the same. It is as follows:

Claim Settlment Ratio (CSR) = (Total claims paid or settled) / (Total claims received + Any outstanding claims at the start of the year)

As an example: Suppose a health insurance provider A settles 90/100 of the claims made by its customers in a certain year. The insurer’s claim settlement ratio will be 90%. In the following year, if the same insurer A settles 250 out of the 290 claims made. It also has 10 outstanding claims from the prior year. Hence, its total claims come to 300 for the next year. Its claim settlement ratio will be:

[250 / (290+10)] x 100 = 83.33%

Hence, the number of claims accepted is simply divided by the total number of received in the same time period, and this number is ascribed a percentage value. Normally, a consumer need not calculate their health insurance claim settlement ratio. This number is published by the insurance provider on their website. One can also find a table of claim ratios published by the IRDAI all at once. 


Importance of the Health Insurance Claim Ratio


The claim ratio number is not a hard and fast rule for picking a policy but it is recommended that it hold some power over your final decision. This is because a lot of the benefits of health insurance like pre hospitalization expenses, critical illness insurance, and more that sway you towards one policy over another may not prove fruitful if that insurance provider has a low claim settlement ratio. The higher the claim settlement ratio of an insurance provider the more likely you are to reap the benefits of your policy.

You also get a degree of reassurance each time you pay your premiums towards your health insurance policy that if the need ever arose, your health insurance provider would cover you. There is also fierce competition in the insurance market at the moment, hence, you have the convenience of going for a policy that meets your quote of requirements while also offering a good CSR. 


Here are some of the benefits of considering the Claim Settlement Ratio -


- Allows a sneak peek into the insurance provider’s history of settling claims.

- Grows the buyer's confidence in their policy and likely it is to protect them in a time of need.

- Makes buying health insurance easier. Looking at CSR can help compare different health insurance policies and make a decision about which is superior.

- A good CSR demonstrates reliability and efficiency from the insurance company’s end. A low CRS demonstrates a lack of efficiency in claim settlement. This information is helpful in understanding an insurance company better. 



In response to the surge in demand for health insurance, insurance providers are offering a slew of health insurance types so buyers can find exactly what they need — be it individual health insurance plans or family health insurance plans. Beyond the types of plans, insurers are also offering specialised insurance and enhanced benefits of health insurance like pre hospitalization expenses, critical illness insurance, and more. Claim settlement ratio is paramount when it comes to choosing a policy and securing your future. Read more on tips for buying health insurance here.

Trending Now


We think our health habits are on point with every cup of green tea we drink or every time we order a salad. Often, we ignore the small things that we do every day which leads to an unhealthy body. Avoiding simple lifestyle mistakes can help us enjoy good health.


Ask most people what they want out of their lives and the answer is simple: to be happy. In some ways, even if we don’t say it aloud, we all wish that we could be happier.