Explaining the Claim Settlement Ratio in Health Insurance

The claim settlement ratio (CSR) of the insurance company is one of the most important factors to be considered when investing in an insurance product. A good CSR is an assurance of your claim being honoured in the time of your need.

What is the claim settlement ratio?

Simply put, the claim settlement ratio is the percentage of claims that an insurance company settles against the number of claims it has received. Every year, insurance companies declare their claim settlement ratio. This ratio is calculated annually based on the number of claims received and settled during a particular fiscal year. This is inclusive of life insurance claims as well as other insurance products such as the claim settlement ratio of travel insurance and health insurance claim settlement ratio.

You can find the CSR of all the registered insured companies on the official website of the Insurance Regulatory and Development Authority of India (IRDAI).

What does the claim settlement ratio show?

The claim settlement ratio shows the credibility of the insurance company. The higher the CSR, the higher the credibility of the insurance company. It means a higher chance of your claim being settled without any hassles. There is no point in investing in an insurance product if you cannot trust your insurer to support you when you need to utilise your policy. A trustworthy insurer honours your claim if you have done everything on your part honestly. You must choose an insurer with a credible track record of settling the claims of its policyholders.

What is a good claim settlement ratio?

Suppose, you are about to buy a health insurance plan and you are checking the health insurance claim settlement ratio of your preferred insurer. Here are the things that you must assess before buying the insurance product:

• High CSR:

• Make sure that the company you are planning to buy insurance from has a high claim settlement ratio. A high CSR implies a higher chance of your claim being settled.

• Claim settlement process should be easy:

• Check the claim settlement process of the insurance provider. Go to their website or talk to their representative to know the details of the process. In the hour of need, you do not want to be engrossed in a tedious long claim settlement process.

• Claim settlement process should be quick:

• Check the average time taken by the insurance company to settle the claim. If it is a long time-consuming process, chances are high that it may cause you financial and mental stress when you least want it.

• CSR of the last five years:

• Look beyond the immediately preceding financial year and check the CSR of the last five years. This will tell if your preferred insurer has been settling claims consistently.

• Financial statements of the insurance company:

• Sometimes, knowing the CSR history of the insurance provider is not enough. It can be so that they have managed to maintain a high CSR until now. So, go for a financially-healthy insurance company. For example, ICICI Lombard’s claim settlement ratio is not only good, but its financial statements are also positive, making it a trustworthy and credible insurance company.