You must always check the claim settlement ratio (CSR) of a health insurance company before buying a policy from them. In fact, you should compare different insurance providers, their plans, terms and conditions, coverage, and waiting period for pre-existing diseases before paying the premium amount. Also, compare their health insurance claim settlement ratio. This is because a medical emergency would already put you under immense mental stress. In such a situation, the last thing you would want to do is follow up through a complex claim settlement process, and worse, face claim rejection. An insurer with a good claim settlement ratio will help you with a seamless and hassle-free claim settlement process.
What is a claim settlement ratio?
The Claim Settlement Ratio (CSR) is the percentage of health insurance claims settled by an insurer compared to the total claims received in a given period. It indicates the insurer’s efficiency in processing claims and honouring policyholder benefits.
Formula for Claim Settlement Ratio:
For example, if an insurer receives 10,000 claims and successfully settles 9,500, its CSR would be 95%.
Types of health insurance claim ratio
There are different types of claim ratios used to assess an insurance company’s performance:
- Claim Settlement Ratio (CSR): Measures the percentage of claims successfully settled.
- Incurred Claim Ratio (ICR): The ratio of total claims paid to total premiums collected by the insurer.
- Claim Rejection Ratio: Percentage of claims rejected by the insurer.
- Claim Pending Ratio: The proportion of claims still under process.
Why is the claim settlement ratio important when buying health insurance?
The CSR is crucial when selecting a health insurance plan because:
- It reflects the insurer’s credibility and efficiency in claim settlement.
- A higher CSR indicates a greater probability of claim approval.
- Helps policyholders avoid insurers with a high claim rejection rate.
- Ensures health insurance for senior citizens offers financial security without unnecessary claim delays.
What is considered as a good claim settlement ratio?
A good CSR is generally considered to be above 95%, meaning the insurer successfully settles a vast majority of claims. However, a very high CSR (near 100%) might indicate relaxed claim processing, leading to financial instability for the insurer.
How does claim settlement ratio help you choose the right health insurer?
When selecting a health insurer, a high CSR indicates:
- Faster claim processing.
- Fewer claim rejections.
- Financial stability of the insurance provider.
- A more seamless claim experience for policyholders.
Is the claim settlement ratio enough for evaluation?
Besides the claim settlement ratio, consider the following factors to ensure a smooth claim settlement of your health insurance:
- While it is suggested that you should always opt for an individual health insurance provider with a high claim settlement ratio, it is equally important to check the settled claim amount. If the average amount is low, the company may settle a large number of claims for a smaller sum insured.
- You also need to check the claim settlement process of the insurance company you are buying your health insurance The process should be easy and hassle-free.
- Go for insurers with a good digital presence and equally good online customer service.
- While checking the claim settlement ratio, check the company’s CSR for the last 4-5 years. A one-time high CSR does not ensure consistent performance. Choose a company like ICICI Lombard that has been consistently performing well. You can check the ICICI Lombard Health Claim Settlement Ratio from the IRDA Claim Settlement Ratio 2022 annual report.
Importance of claim settlement ratio
Understanding the claim settlement ratio is important because it-
- Helps in choosing a reliable insurer.
- Provides assurance of claim approval.
- Reflects the efficiency of the insurance company.
- Prevents financial distress during medical emergencies.
Required documents for claim settlement
To file a claim, policyholders must provide:
- Duly filled claim form.
- Medical bills, hospital discharge summary and doctor’s prescription.
- Policy document and insurance ID.
- KYC documents (Aadhaar, PAN, etc.).
- Pre-authorisation form (for cashless claims).
How to check health insurance claim settlement ratio?
Before zeroing in on a health insurance plan, run through the following steps:
- Every year, the Insurance Regulatory and Development Authority (IRDA) publishes the claim settlement ratios of all insurance companies registered under it.
- Visit the official website of the IRDA and check the IRDA health insurance claim settlement ratio of your preferred insurance company. Look for the IRDA Annual Report and download the PDF for the latest financial year.
- Make a list of insurance companies with a high IRDA Claim Settlement Ratio in 2022. The higher the claim settlement ratio, the better your chances of getting the sum insured in times of medical emergency.
- Now, compare the coverage benefits of the available health insurance plans of companies with a high claim settlement ratio.
Where to check the claim settlement ratio of a health insurance company?
To check the CSR, you can use the following platforms-
- IRDAI official website.
- Insurance provider’s website.
- Insurance aggregators provided by insurance providers online
How is the health insurance claim ratio calculated?
The CSR is calculated annually by dividing the total claims settled by the total claims received, then multiplying by 100 to get the percentage.
Types of claim settlement processes
These are the types of claim settlements you will see in the insurance claim process-
- Cashless Claim Settlement: The insurer directly settles bills with network hospitals.
- Reimbursement Claim Settlement: The policyholder pays the bills first and later claims reimbursement.
- In-house vs. Third-party Claims Processing: Some insurers handle claims internally, while others outsource them to Third-Party Administrators (TPAs).
FAQs
- What is a good claim settlement ratio for health insurance?
A CSR above 95% is considered good, ensuring a higher probability of successful claim settlements.
- Does a high claim settlement ratio guarantee a hassle-free process?
Not necessarily. Other factors like customer service, hospital network and turnaround time should also be considered.
- Where can I find the claim settlement ratio of my insurer?
You can check the IRDAI website, the insurer’s official website, or insurance comparison platforms.
- Is CSR relevant for health insurance for senior citizens?
Yes, CSR is crucial in health insurance for senior citizens as they require higher medical coverage and faster claim processing.
- Can I trust an insurer with a 100% claim settlement ratio?
A 100% CSR may indicate relaxed claim approvals, potentially leading to financial instability. A ratio between 95-98% is ideal.
Conclusion
Remember, a health insurance plan may come with good coverage and several additional benefits at a competitive price. But, if the claim settlement ratio of that health insurance provider is not good, you may face a hard time getting your claim settled when you need it the most. This would defeat the whole purpose of getting health insurance. While a high CSR increases the likelihood of claims being settled, it should be evaluated along with other factors like network hospitals, customer service and financial stability. Whether purchasing a health insurance plan for individuals or health insurance for senior citizens, choosing an insurer with a strong claim settlement record ensures peace of mind during medical emergencies.
Disclaimer: The information provided in this blog is for educational and informational purposes only. It may contain outdated data and information regarding the Insurance industry and products. It is advised to verify the currency and relevance of the data and information before taking any major steps. ICICI Lombard is not liable for any inaccuracies or consequences resulting from the use of this outdated information.