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Health Insurance Claim Settlement Ratio

Claim Settlement Ratio in health insurance is one of the most important aspects to consider when choosing a health insurance company because it shows the insurance provider’s capacity to settle claims. The Claims Settlement Ratio (CSR) is a percentage that represents the number of claims paid out by a health insurance company compared to the total number of claims filed during the financial year.

The Insurance Regulatory and Development Authority of India regulated the settlement of health insurance claims. In the first month of each year, it discloses the claim settlement ratios. When opting for a health insurance plan, the health insurance claim ratio is an important factor.

5 Key Factors To Understand Claim Settlement Ratio in Health Insurance

  1. Consistency: 

The ratio of claims settled should be stable. Regularly look at an insurer’s claim settlement ratio during the last five years. You may trust the insurer’s capacity to settle claims if there are no inconsistencies and the claim settlement ratio is high.

  1. CSR Ratio: 

Calculations aren’t always clear. To compute the claim settlement ratio, use the following formula:

Claim settlement ratio = (Total claims settled or paid) / (Total claims received + Outstanding claims at the outset of each year)

Some of the health insurance companies with a high Claim Settlement Ratio for the Financial Year 2019-20 are Oriental Insurance, IFFCO Tokio Health Insurance, Care Health Insurance, Magma HDI Health Insurance, and so on.

Note: Because of their high Claim Settlement Ratios, customers find these insurance firms to be reliable.

  1. The number of claims that an insurance company receives

Another thing to look into is how many claims an insurance company receives in a given year. This offers you an idea of the size and age of the insurance organisation. When purchasing health insurance in India, knowing which firms have the best Claim Settlement Ratio will assist you in making an informed decision.

  1. All Company Products Have Been Measured

In addition to health, the Claim Settlement Ratio is computed for all of the company’s products combined. A life insurance company’s Claim Settlement Ratio, for example, will include the claim settlement of the plans it sells, such as ULIPs. An insurance company’s CSR is not available for every single product it sells.

  1. Annual Report:

In its Annual Report, which is available on its website, the IRDAI discloses the claim settlement ratio of all public and commercial insurers. When purchasing health insurance in India, you must go through the same process before narrowing down your options.

How Health Insurance Claim Settlement Ratio Calculated?

A basic formula for calculating the health insurance claim settlement ratio is as follows:

(Total claims settled or paid) / (Total claims received + Outstanding claims at the commencement of every year) = claim settlement ratio

For a better understanding of the formula, consider the following example.

A health insurance company received one thousand claims. 950 of these claims were paid out by the company. Fifty claims were either denied or not paid. The health insurance claim settlement ratio will be calculated as follows using the formula: 95%= (950) / (1000).

Why Check Claim Settlement Ratio Before Choosing Health Insurance Provider?

The following are some of the important factors that affect the importance of examining a health insurance company’s claim settlement ratio when choosing a good health insurance plan:

  • Because the claim settlement ratio impacts the likelihood of your claim being paid on time by your health insurer, it assists you in getting your claims paid quickly and efficiently.
  • To ensure that a company’s performance has been constant over the last five years, look at its claim settlement ratios. This will give you more confidence in their capacity to settle your claims.
  • You can assess the health insurance company’s credibility using the IRDAI’s claim settlement ratio data.
  • A company with a greater claim settlement ratio gives the buyer more credibility when it comes to investing in a health insurance plan.

Incurred Claim Ratio and Claim settlement Ratio of Different Insurance Companies

Let’s take a look at the different ICR and CSR values of health insurers for the two financial years, 2018-19 and 2019-20.

Health Insurance ProvidersClaim paid within 3 Months (2018-19)Claim paid within 3 Month (2019-20)Incurred Claim Ratio (2018-19) (in Percent)Incurred Claim Ratio (2019-20) (in Percent)
ACKO General Insurance98.8%93.49%59%60.33%
Bajaj Allianz97.9%98.61%69%70.74%
Bharti AXA97.1892.17%77%78.33%
Cholamandalam MS88.4%91.47%28%74.99%
Edelweiss General97.8%99.72%123%114.70%
Future Generali86.9%93.34%69%59.66%
Go Digit99.4%99.65%79%75.00%
HDFC Ergo98.8%99.80%76%77.20%
ICICI Lombard97.1%96.93%75%72.86%
IFFCO Tokio83.7%81.67%88%88.61%
Kotak Mahindra97.7%98.62%68%68.80%
Liberty97.0%97.84%73%72.42%
Magma HDI92.2%95.40%71%84.35%
Navi General——–98.70%——66.52%
Raheja QBE4.7%30.29%83%75.19%
Reliance98.1%98.16%86%83.65%
Royal Sundaram96.5%97.75%85%85.03%
SBI General97.0%97.84%72%71.12%
Shriram General85.7%87.53%68%65.04%
Tata AIG95.1%92.82%78%77.44%
Universal Sompo97.0%22.14%70%73.41%

What Is Claim Incurred Ratio and How Is It Different From CSR?

ICR is the ratio of an insurer’s total value of claims resolved to the total value of premiums collected in a particular period.

Let’s look at an example to help you understand!

For example, if a health insurance company granted a total claim of Rs.80 crores in 2017 against premiums received of Rs.100 crores, the ICR for 2017 would be 80 percent.

When a health/general insurance company’s Incurred Claim Ratio is exceptionally low, it means that the health insurance company’s claim settlement process is quite rigid.

CSR or ICR- What To Check While Selecting Health Insurance Provider?

Before choosing an insurance policy, be it for yourself or your family, you cannot overlook the importance of ICR and CSR. They are both equally significant. CSR helps a person to understand the number of claims settled by an insurer in a given financial year. On the other hand, the incurred claim ratio (ICR) educates a person about the percentage of claims paid (apart from the outstanding ones in a financial year) by the insurer. Therefore, it’s recommended to carefully consider both these parameters while going with a health insurance provider. After all, it’s about the health and future of your family.

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