Why You Must Also Look At Incurred Claims Ratio To Buy Medical Insurance

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What is a health insurance claim settlement ratio, and what are the benefits?

A claim settlement ratio of a health insurance provider is one of the most crucial aspects in deciding which health insurance provider and plan you should ultimately choose. After all, this health insurance could be an actual lifesaver at some point in your life. It will allow you to efficiently recover from any health condition and offers mental peace as you know that towering medical bills for the treatment will not batter you.

Moreover, it is the claim settlement ratio of health insurance service providers that allow you to ascertain whether the premium you are paying toward your health insurance policy is being put to good use or not! Suppose the claim settlement ratio of any given health insurance company is deemed to be not good. In that case, your premium toward the health insurance policy, in effect, might not offer the desired level of protection. Therefore, understanding the concept of claim settlement ratios of health insurance providers is extremely crucial in determining the suitability of the insurer. If not, it is time to explore the market for a better and more reliable option.

  • The claim settlement ratio is defined as the total number of claims that have been resolved and paid for by the insurer regarding the total number of claims received in the financial year.
  • A claim repudiation ratio refers to the percentage of claims that any given health insurance service provider has rejected for valid reasons.
  • Claim pending ratios refer to the percentage of claims by insured persons, existing customers that are yet to be either repudiated or satisfactorily settled.

Claim settlement ratios

In formal terms, the claim settlement ratio of a health insurance provider refers to the percentage of the total insurance claims received by the health insurance provider that have been satisfactorily resolved. The resolution should have been accepted by the insured persons and must be in line with the individual terms of the insurance policies. Given below is the mathematical formula used by insurance service providers to calculate their claim settlement ratios:

Claim Settlement Ratio (CSR) = (Total claims settled or paid)/ (Total claims received + Outstanding claims at the beginning of the year)

From this, it is clear that the higher the claim settlement ratio, the more likely your claim(s) will be approved.

Understanding the process of settling insurance claims

The procedure regarding the settlement of claims for health insurance policies varies across health insurance providers. However, the general process is a well-defined 3 step process.

  • The first step is to assess the integrity of all the requisite documents that have been submitted while filing a claim against the health insurance policy.
  • Once the documentation checks out to be authentic and valid, the payment of premiums by the policyholder to date is meticulously checked for discrepancies.
  • The last step is to ensure that neither the claim is a fraudulent one nor has been created by circumstances not covered under the health insurance policy.

While most insurance companies take about 2 or 3 working days to settle claims made by their existing policyholders, a few companies offer unique services such as the instant settlement of the claim for claims up to a predefined limit. Services like these make the process of settling a claim extremely straightforward and convenient.

Tips for quick claim settlement

As a health insurance policyholder, some steps can help ensure that your legitimate claim is processed and settled effectively according to the terms laid down in the health insurance policy.

  • For starters, submitting necessary documents plays a foremost important role in the procedure regarding settlement of claims by insurance companies. Almost the entire situation is assessed based on the documents you submit as a policyholder while claiming your health insurance policy.
  • Further, while selecting a health insurance policy, you must be truthful about all the relevant factors concerning the insurance policy. For example, suppose you are a smoker. In that case, you are required to be truthful about it and disclose it since it allows the insurance provider to proportionately decide the appropriate risk percentage and the premium you will be required to pay for your health insurance. After all, smoking is a massive liability on your health and, therefore, a risk for the insurance company.
  • When purchasing any health insurance policy, it is best advised that you must handle all the documentation of it along with any required signatures. Avoid appointing a proxy or an agent to handle such aspects of your health insurance.
  • And ultimately, when a policy is purchased by, you must list a nominee. If any medical misfortune covered by your health insurance policy takes place, there will be someone who can legitimately claim on your behalf.

Following these minute details can help save an awful lot of hassle when claiming the health insurance policy.

Additional factors you should consider concerning claim settlement ratios

It is a settled rule that having a good claim ratio automatically means that the given health insurance service provider is more reliable and trustworthy. This trust translates into fewer hassles at the time when a claim against your insurance policy needs to be made. However, the claim settlement ratio needs to be considered in context with a few extra factors.

To begin with, the claim settlement ratio must be looked at over a period or multiple financial years. Only and only if it is consistent, with no sharp variations, can you assume the health insurance service provider to be a trustworthy partner for your health insurance requirements? The general period over which you must examine a health insurance provider’s claim ratio and claim settlement ratio is five years or more.

In furtherance to this, reports by the Insurance Brokers Association of India are published in the General Insurance Claim Insights Handbook for Policy Holders. These reports explore the claim settlement ratios of both health insurance providers. Studying these reports can go a long way in helping you zero down on a health insurance company officially recognized by the other players in the industry and other health insurance policyholders for its healthy claim settlement ratios.

Another factor is the total number of claims that a given health insurance provider receives. This is an important factor in assigning a value to any insurance company’s claim settlement ratio because the number of claims an insurance provider gets shows how trusted the insurance company is. Other important factors that you must consider are how many average claims are received every year and how reputed the insurer is.

Benefits of good claim settlement ratios

Claim settlement ratios are inspected and declared publicly by the Insurance Regulatory and Development Authority of India or IRDAI. These ratios are released for health insurance policy buyers to check and make an informed decision regarding their choice of an insurer. Therefore, there is no doubt that the claim settlement ratio figures of a given health insurance company are extremely crucial to their business and their relevance in the health insurance market. However, what is the reason for these figures to be so important? As mentioned earlier, it is ultimately the claim settlement ratio that dictates whether a health insurance provider can be relied upon to effectively pay against the insurance coverage during a time of medical emergency or necessity.

Only when the insurance company is reliable will you feel secure about your financial condition during any medical emergency that may, unfortunately, befall you or any other beneficiary. If the health insurance company has a low claim settlement ratio, it is less likely to provide you with the financial assistance you need to pay off hospital bills. The benefits of high claim settlement ratios are as follows –

1) Reliable financial support in times of difficult events that fall within the insurance coverage of the specific policy.

2) Promptness of claim settlement and minimal hassles during times of need.

3) A high percentage of claim settlement ratios in the wake of a significant number of claims proves the credibility of the health insurance provider.

4) Indicates the commitment of the insurance company toward your financial well-being.

5) The hassle-free settlement as per the insurance policy in mentally challenging situations will let you focus on other important things.

Other important aspects of health insurance

Another thing to remember is that the concept of claim settlement ratios remains the same across all insurance sectors, be it health insurance or vehicle insurance. Ultimately, what you seek is a high claim settlement ratio that proves that the company lives up to its contractual obligations, as mentioned in the health insurance policy.

Suppose you are doubtful about purchasing a health insurance policy at all. In that case, you should remember that purchasing and smartly investing in a health insurance policy has many direct benefits, such as financial security in times of medical emergencies. There are also indirect benefits such as tax savings, cashless claims at network hospitals, and ongoing insurance coverage renewal.

It goes without saying that in today’s day and age, not purchasing a health insurance policy could be the biggest blunder of your life. Not only does it safeguard your financials, but it also ensures that your family is compensated in the event of your untimely demise. Moreover, it is an investment for a secure future that does not waste even if it is not used. Health insurance is an investment and not an expense.

Always be sure to analyse the claim settlement ratios of different insurance companies before selecting a health insurance policy. The policy could seem like the best option at that time. Still, without a good claim settlement ratio, there is no reliability regarding the claim being approved by the health insurance company when you need it. Therefore, the higher is the claim settlement ratio of an insurer; the better are your chances of timely financial assistance in a time of need!

Few Frequently Asked Questions :

  • What is the claim ratio in health insurance?

    Claim ratios refer to the different types of the ratio of settled, rejected, or pending claims against the total number of claims to a given health insurance company. Now, in essence, there are 3 broad categories in which claim ratios are divided –
    1) Claim settlement ratios
    2) Claim repudiation ratios and
    3) Claim pending ratios

  • What is the claim settlement ratio?

    In simple words, the claim settlement ratio of a given insurance provider is the mathematical representation of how the insurance provider has effectively settled many insurance claims made by existing customers in a satisfactory manner. Having said that, the claim settlement ratio is naturally directly proportional to the percentage of satisfied customers.

  • What is the claim settlement percentage?

    The claim settlement percentage refers to the representation of the claim settlement ratio as a percentage. Therefore, the claim settlement percentage gives the total claims that the health insurance provider has satisfactorily resolved.

  • What is the claim pay ratio?

    The claims pay ratio of an insurance provider refers to the number of claims that the insurance company has satisfactorily resolved out of the total number of claims that the insurance company has received. It is also more commonly referred to as the claims settlement ratio.

  • How is the claim settlement ratio calculated?

    Given below is the mathematical formula used by insurance service providers to calculate their claim settlement ratios to declare it to their customers and clients: Claim Settlement Ratio (CSR) = (Total claims settled or paid)/ (Total claims received + Outstanding claims at the beginning of the year)

  • Why is the claim settlement ratio important?

    The cardinal rule that health insurance policy buyers must follow is that insurance companies with higher claim settlement ratios are more reliable and more likely to be of assistance when required.

  • What is the procedure regarding the settlement of claims?

    The first step is a thorough inspection of the requisite documents, followed by authentication of the supporting documents and credentials of the claimer. The last step is to process the claim based on its merit and settle or reject it.

  • What is a good claim settlement ratio for a health insurance company?

    The cardinal rule that you must follow while choosing a health insurance policy is that the higher is the claim settlement ratio, considering the consistency and the total number of claims made in a financial year, the better is the reliability and quality of services offered by the health insurance company.
    Therefore, the health insurance industry benchmark demands the claim settlement ratio of any given health insurance service provider to be above 85% for it to even qualify as a “good” claim settlement ratio. There are plenty of options available for people who wish to invest in health insurance policies of companies that have claim settlement ratios above 85%.

  • Which insurance company in India has the best claim settlement ratio?

    With a huge motley of insurance companies to choose from, the average insurance policy buyer in India will most likely be spoilt for choice when choosing the ideal health insurance service provider. However, in terms of pure figures, Navi Health Insurance boasts of ….% claim settlement ratio.

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