Before we go into claim settlement ratio, we need to understand what is a claim. A claim is a formal communication with the insurance company about receiving the sum assured in the policy agreement.
What is claim settlement ratio? A claim settlement ratio (CSR) for health insurance is the number of claims an insurance company has settled following the medical treatment of policyholders.
Here are some points to keep in mind while choosing your health insurance policy.
● You should know that there are two ways of settling claims for health insurance policies. The first is cashless claim and the second is reimbursement. If it is a planned hospitalization, then it is better for you to choose from the network hospitals which are known as preferred provider network (PPN) in insurance industry parlance. The insurance company does not settle the claims directly but through third party administrators (TPA) for both scenarios.
● It is very important to consider the CSR before buying a health insurance. If an insurance company receives 100 claims and pays 97 of them, it means the percentage of claims settled is 97 percent – which is a good number.
● Every year the insurance regulatory authority of India (IRDA) publishes a report which includes various details of the insurance industry like industry average, claims data and CSR among other things.
● The sole purpose of paying your premiums diligently is that the health insurance company fulfills all its promises when you need your expenses to be covered when you get medical treatment. A sure shot way of checking the performance of your insurer is to get hold of its claim settlement ratio.
● Another important factor to consider while choosing your health insurer is incurred claims ratio or ICR. Incurred claims ratio is the sum total of claims paid by the insurance company divided by the total premiums it received in the same time period. ICR is an indication of the company’s ability to pay claims. Refrain from choosing a health insurance company which has a very high or very low ICR.
● Some claims are rejected because of fraudulent practices while others are rejected because of exclusions in the policy which the claimant missed out on while buying it or he did not file for it within the stipulated time.
While a higher CSR is an indication of a good insurer, a high ICR is not a good sign. A high premium should not come in the way of choosing your health insurance if the CSR is impressive.
However, a high Claim settlement ratio cannot be the only criteria for choosing your health insurer. The quality of service provided, the sensitivity for the claimants and the time taken to settle a claim should also be considered before zeroing in on your insurer.