What is the insurance claim settlement ratio?
An insurance claim settlement ratio is the ratio between the number of claims settled to the number of claims made in a financial year by an insurance company.
How to calculate claim settlement ratio?
The Claim Settlement Ratio (CSR) is calculated as follows
Claim settlement ratio = Number of claims settled/Number of claims made*100
For example, let us assume an insurance company has a CSR of 80%. This means that for every 100 claims received by the insurance company, 80 claims are settled and 20 claims are rejected.
Rejection of claims can mostly happen due to misrepresentation of facts, fraud, impersonation, etc. Hence, it is always important to present the correct information before applying for claims.
The higher the percentage of CSR, the better the insurer. This applies to both health insurance and term insurance policies. Moreover, a claim settlement ratio is one of the authentic factors to look for regarding an insurance company to understand if they handle the claims of the policyholders well or not.
Who decides the claim ratio of the insurance companies?
Every year, the IRDAI (Insurance Regulatory and Development Authority of India) publishes a report which mentions the claim settlement details of all the 24 life insurance companies and 30 health insurance companies in India. The report includes all the details regarding the number of claims made by customers, the number of claims that were settled by the insurers, and the number of claims that were rejected during the financial year of an insurance company.
Significance of the claim ratio insurance companies
1. Reliability of the insurance company
Claim Settlement Ratio in an insurance company is an important factor to consider while choosing a health insurance or a life insurance plan. It tells about the claim settling ability of your insurance provider. If your insurer is unable to settle the claims, then the purpose behind buying insurance goes useless. Hence, the CSR of an insurance company shows its reliability, which helps the customers in deciding the insurance company for policy purchase.
2. Consistency of the insurer
There should be a consistency in the claim settlement ratio of an insurance company. Hence, while choosing an insurance company for an insurance plan, check for the claim ratio of the past 5 years. Choose the plan if the company has been consistent in settling claims throughout. This shows the capability of the insurance company to settle the claims.
3. Number of claims received by the insurer
While checking the claim ratio, we get to know the number of claims received by the insurer in a financial year. This gives us an estimate of how big and old the insurance company is.
Types of claim settlement
There are two types of claim settlement. They are
1. Cashless claim settlement
The cashless claim settlement happens when you take the medical treatment in a network hospital. Firstly, you will have to intimate the insurer regarding the treatment in a network hospital. After that, file the claim form in the cashless hospital with necessary documents like the health insurance card and valid ID proof. After this, the insurer directly settles the claim amount in the network hospital.
2. Reimbursement claim settlement
If the policyholder takes the treatment in a non-network hospital, then he/she can avail the reimbursement claim. According to this, the policyholder has to pay from his/her pockets during the medical treatment in the hospital. After he/she is discharged from the hospital, using all the necessary documents like medical bills, valid proof and health insurance card, they can file a reimbursement claim. The insurer settles the claim amount directly in the bank account of the policyholder.
Claim ratio of health insurance companies
Here is the claim ratio of health insurance companies in India during the financial year 2019-20.
Under public sector general insurers
- The Oriental Insurance - 93.96%
- The New India Assurance - 92.68%
- National Insurance - 83.78%
- United India Insurance - 78.03%
Under large private sector general insurers
- IFFCO Tokio General Insurance - 96.33%
- Bajaj Allianz General Insurance - 92.24%
- HDFC Ergo General Insurance - 86.52%
- Future Generali India Insurance - 82.96%
- Royal Sundaram General Insurance - 81.50%
- ICICI Lombard General Insurance - 78.67%
- Reliance General Insurance - 76.43%
- Tata AIG General Insurance - 76.04%
- Bharti AXA General Insurance - 76.01%
- SBI General Insurance - 66.08%
Under small private sector general insurers
- Magma HDI General Insurance - 95.17%
- Navi General Insurance - 86.98%
- Edelweiss General Insurance - 85.57%
- Liberty Videocon General Insurance - 81.03%
- Kotak Mahindra General Insurance - 75.45%
- Acko General Insurance - 74.09%
- Universal Sompo General Insurance - 70.75%
- Go Digit General Insurance - 63.56%
- Cholamandalam MS General Insurance - 56.25%
Under standalone health insurers
- Care Health Insurance - 95.47%
- Niva Bupa Health Insurance - 89.46%
- ManipalCigna Health Insurance - 85.72%
- Star Health Insurance - 78.62%
- Aditya Birla Health Insurance - 70.81%
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