Importance of Claim Settlement Ratio while Buying Health Insurance
Claim Settlement Ratio (OND 2018)
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Health insurance claim settlement ratio is a metric that is generally used to rate insurers. If a particular insurance company settles a high percentage of medical insurance claims that have been intimated, they will have a higher claim settlement ratio. Typically, insurers with simple and quick claim procedures and a large number of network hospitals often have a much higher claim settlement ratio.
The standardization of health insurance claim settlement is done by an authority known as IRDAI, the Insurance Regulatory and Development Authority of India. The IRDA publishes the claim settlement ratios for the various insurance companies annually in the first month of every year. The health insurance claim ratio is often the most important factor that is taken into consideration by an individual when they are looking for an insurance plan from a company.
It is the yardstick to major the reliability of the insurance company to settle the claim. A higher claim ratio assures the higher possibility of hassle-free claim settlement. Else, your purpose of investing in health insurance plans will be defeated if your claims are denied or delayed by the insurer. Hence, you need to ensure that your insurer has a good claim settlement ratio.
The claim settlement ratio refers to the total number of claims settled by the insurance company. For instance, if an insurer has an 80% health insurance claim settlement ratio this means that the company is able to settle 80 out of 100 claims.
Claim Settlement Ratio = (Total Claims Settled)/(Total Reported Claims + Outstanding Claims at Beginning of Year - Outstanding Claims at the End of Year)
Consider an example where an insurance company receives 1000 claims. Out of these, the company has paid 973 claims. Of the remaining 27, they rejected 16 and are yet to make a decision on 11 claims. The claim settlement ratio, in this case, would be 973/1000 = 97.3%.
The insurance claim settlement ratio is always calculated as a percentage and has no units since it is a ratio of two numbers.
Here’s what Moneycontrol Says:
When it comes to health insurance, Religare Health had a claims settlement ratio of 92.58 percent for FY19. The health insurer handled 7,00,596 claims in the financial year and settled almost 93 percent of them.
For the industry as a whole, the claims settlement ratio stood at 85.18 percent for the year ended March 31, 2019. This rose from 80.77 percent in the year-ago period.
Medical insurance claim settlement ratio allows a person to understand the history of the insurer, and how well they can handle claims. It can act as an important factor in deciding between two insurers. If two products from different insurance companies have similar benefits, but one of them has a 90% insurance claim settlement ratio while the other has just 60%, then a customer is more likely to choose the former. Religare Health Insurance offers one of the best insurance claim settlement ratio in health insurance at 93%.
However, one must keep in mind that the health insurance claim settlement ratio is not a perfect indicator of how good an insurance company is. Consistency of the insurance claim settlement ratio over the years must also be taken into consideration. A consistent claim settlement ratio indicates reliability, which is often the most important factor while choosing an insurance company.
>> Check: What is No Claim Bonus
Here are the steps that must be followed to avail a cashless health insurance claim.
A cashless insurance claim settlement is a facility in which the insurance company itself settles the medical bill with the hospital. You are spared the burden of paying the bills and waiting for reimbursement from the insurer. In most cases, the cashless health insurance claim is provided only at network hospitals that have a tie-up with the insurance company. A cashless insurance claim settlement also saves the hassle of submitting all the relevant medical bills along with the discharge summary to the insurer.
The claim process for cashless treatments is as illustrated below:
Reimbursement claim settlements will generally require you to pay all hospital expenses and collect all related medical bills ranging from ambulance cost to treatment cost. You will also require a legitimate discharge certificate and a discharge summary from the hospital before you can claim your insurance. The insurance company will carefully examine your submitted bills and hospital certificates before granting you a reimbursement.
The insurance claim process for reimbursement settlements is illustrated below:
When you are investing in a health insurance policy that means you are looking for protection and financial security against future medical emergencies. This is why it’s advisable to opt for the health covers from the insurer that has a higher claim settlement ratio. Read below why it is so important?
The ideal Claim settlement ratio lies between 80-90 %. Companies with a claim settlement ratio between 80-90% have great value healthcare products and good to go for investment. They offer a wide range of health insurance products with maximum coverage and a quick settlement claim process. Therefore, it’s advisable to opt for the companies with a higher claim settlement ratio to get the benefits under a health insurance claim.
You should also check the average claim settlement time of the health insurer. It should be a period between 20-30 days. This time frame reflects that the health insurance company is good at settling the claim efficiently. You should go for the insurer that offers you the claim settlement within a short period.
New insurers generally have lower claim settlement metrics than already existing companies. So it’s better to check the claim history of the company before you buy a health insurance plan. You can ask about the number of claims settled so far, unsettled claims, and claims that are on hold. Thus, with the claim settlement ratio, you can cross-check the reliability of the insurer.
A good settlement report shows that the insurance company has sound financial health, making profits, offering qualitative health insurance plans, and meeting customers’ expectations. This type of company is trustworthy to invest your hard-earned money and protect your future.
Therefore, whenever choosing a health insurance company, it’s always recommended to do a thorough search on its Claim settlement ratio. It gives you an idea about the financial history of the health insurance company. You can check the floater or family health insurance plans offered by Religare health insurance that has a consistent claim settlement ratio 97% and assure hassle-free timely claim settlement.