Understanding Health Insurance Claim Settlement Ratio

To plan your finances is good, but at the same time, doing it smartly is equally important. Securing your health is a crucial part of smart financial planning and the adage – ‘Health is wealth’ – justifies this.

Insurance is one area that should not be ignored when you think of wealth creation. Insurance plans provide a secure layer of financial protection for sudden and urgent needs. During such turbulent times, you have other things to worry about like proper medical facilities and required medical attention being devoted to the patient. An insurance policy can help you focus on these factors.

When you are getting yourself the right health cover, you must consider claim settlement ratios (CSR) and its importance.

The claim settlement ratio of health insurance companies is an indicator of how many health claims they (individually) settle in a financial year. The calculation is based on the number of claims settled vs. the number of claims received.

Claim settlement ratio = (No. of claims settled/No. of claims received) * 100

To understand, let us refer to an example:

If an insurance company receives 500 claims in a year and the insurer clears 475 of them, the claim settlement ratio comes out to be 95%. On the other hand, the balance 5% are called rejected claims.

Claim settlement ratio can help prospective buyers assess the extent to which each insurer honours the claims made. Financial advisors suggest checking the same for the plans having lowest premiums and highest benefits.

A point to remember is that the claim settlement ratio is calculated across all products of the insurance company. So it becomes difficult to assess the individual ratio for each health insurance plan.

A higher health insurance claim settlement ratio indicates the company’s financial performance and its ability to honour the claims made by its customers.

Apart from this, you should also look if the insurer offers the best ‘value for money’ benefits you are looking for and compare the premiums before buying a health policy. Also, accounting for the exclusions in your policy can be crucial when the need to make a claim rises. The facility for network hospitals, waiting periods, and sub-limits in your insurance plan is also something that you cannot miss.

Keeping in mind the above factors, make sure you opt for the best insurance plan that ticks all the boxes as per your requirement. While you understand claim settlement ratio, you can browse through other topics like ‘What Is Indemnity In Health Insurance?’, ‘What you should know about Certificate of Insurance’, and more on our health insurance glossary section.