The Claim Settlement Ratio in health insurance shows how well an insurance company handles their customer claims. It's also an indication of whether you as a customer should trust the insurer or not.
Let's look at what CSR is and why it's important.
What is the Claim Settlement Ratio in health insurance?
How will a customer understand if an insurance company manages their claims well? By looking at the Claim Settlement Ratio.
Claim Settlement Ratio in health insurance is the number of claims settled versus the number of claims received. The ratio is usually denoted in a percentage form. The higher the percentage, the better for the insurer and customer. A Claim Settlement Ratio above 90% can be considered a good one. The closer it is to 100%, the better.
If an insurer has a higher claim settlement ratio it means that they're a trustworthy brand where you can get all your legitimate claims settled.
Why the Claim Settlement Ratio for health insurance is important
A health claim settlement ratio is an important metric both for the insurance company and for the customer buying the policy. Here are a few reasons why:
1. Gives credibility
A high claim settlement ratio is a sign that the insurance company is doing a good job managing the claims they've received. It shows that they're able to settle claims and fewer claims are being rejected. This also boosts confidence in the customer. Moreover, if the insurance company records a consistently high settlement ratio then it adds to their credibility.
2. Helps to choose the policy
A good health insurance settlement ratio helps a customer decide which policy to buy when comparing different plans. A high claim settlement ratio tells a customer that their claim is likely to be settled by the insurance company which leads them to buy that policy
3. Get your money's worth
Any customer will want to know if what health insurance they buy will give them value for their money. A high health insurance claim ratio tells them that the premium amount they're paying will come to good use if a claim arises. This gives a sense of relief and builds trust with the insurer.
How to calculate the Claim Settlement Ratio?
The Claim Settlement Ratio is calculated using the following formula:
Number of claims settled ÷ number of claims received x 100
It's a simple formula that gives you a picture of the insurance company's claim handling and settlement ability.
However, you don't have to calculate the ratio yourself since the insurer will publish the same on their website and the Claim Settlement Ratios of all insurance companies are available in reports published by the IRDAI every year.
Benefits of knowing the Claim Settlement Ratio
The health insurance claim settlement ratio is not just a figure calculated for the sake of it. There are many benefits to knowing an insurer's claim settlement ratio. We've listed some of the benefits below:
1. Avoid financial risk
When you know that an insurance company has a high settlement ratio then you can be assured that you're claim, if it arises, will be settled by the company. A good claim settlement ratio shows how many claims an insurer has settled in the previous financial year. This means you'll be avoiding financial losses if a claim ever arises.
2. Better claim experience
If an insurance company can settle most of the claims received and if they've had a large volume of claims, it means that their claim processing is quick and efficient. It also means you'll have a hassle-free claim-filing experience with the insurer. This makes knowing the Claim Settlement Ratio a vital factor in deciding which health insurance plan to buy.
3. Better overall experience
A good claim settlement ratio is an indication that the insurance company is focused on giving its customers what they came for, financial safety in times of unfortunate situations. An insurer with a good health insurance claim settlement ratio indicates that your overall experience is likely to be a good one.
Conclusion
The Claim Settlement Ratio for health insurance is akin to having a high score in school exams when applying for colleges. It'll help you decide whether the health insurance plan makes the cut or not.
It instils confidence in the customer that the insurer will handle their claim well if and when it arises. So, always look for an insurance company with a high settlement ratio before buying a health insurance plan.
