Importance of Claim Settlement Ratio When Choosing Health Insurance Policy
Published On Sep 23, 2021 10:00 AM By InsuranceDekho
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Choosing a suitable health insurance policy from a suitable health insurance provider can be tedious sometimes as there are a plethora of options to choose from and it can confuse the people, especially the ones who are buying a health insurance policy for the first time. Before investing in a health insurance policy, individuals must analyze their requirements and consider certain factors like their age, financial budget, medical history, etc. After having considered your choices, you must compare and research about various plans that are available in the insurance market. You must compare the features and benefits of various plans and make sure that it does not exceed your financial budget and is up to your expectations.
There are a lot of health insurance providers in the market that offer exclusive health insurance policies to the policyholders. Therefore, you must compare their claim settlement ratios and other features to choose the best health insurance provider. A claim settlement ratio helps in determining the rate of claims that have been settled by the health insurance provider in a policy year. It is important to buy a plan from an insurer with a good claim settlement record as at the times of a medical emergency, you must be able to avail the benefits of your plan without any inconvenience.
About Claim Settlement Ratio of A Health Insurance Provider
A claim settlement ratio is an essential factor that is taken into consideration by the policyholders while looking for a good health insurance provider. It determines the reliability of a company and their ability to settle claims instantly at the time of a medical emergency. You can consider the health insurance firms with a claim settlement ratio higher than 80%. It calculates the ratio of the total number of claims settled out of the total number of claims received in a financial year. Let us look at the basics of calculating a claim settlement ratio of a health insurance provider for a policy year:
The simple formula to calculate the claim settlement ratio is:
CSR = Total claims settled / (total claims received + outstanding claims at the start of the year)
The above mentioned formula is used by the health insurance companies to calculate their claim settlement ratios for a policy year. The outstanding claims for the previous year are also included in the formula. This ratio greater than 80% is considered ideal for the policyholders. It is important to choose a health insurance provider wisely as it plays the key role in settling the medical dues at the time of hospitalization due to a medical emergency.
Must Read: How Is The Claim Settlement Ratio Calculated In Health Insurance?
Importance of A Claim Settlement Ratio of A Health Insurance Company
Following are some of the key points that determine the importance of considering the claim settlement ratio of a health insurance company at the time of investing in a suitable health insurance plan:
- Since, the claim settlement ratio determines the positive probability that your claim will be settled on time by the health insurer. It helps in getting your claims settled without any hassles.
- You must consider the claim settlement ratios of a company for the past five years to make sure that their performance has been consistent. This will help you in trusting their capability of settling the claims.
- Based on the claim settlement ratio data of the IRDAI, you can determine the credibility of the health insurance company.
- A company with a higher claim settlement ratio instills confidence within the buyer at the time of putting their money in a particular health insurance plan.
Apart from the claim settlement ratio there are several other factors that must be considered while buying a health insurance plan from a particular health insurance company. You can get the data related to the specific health insurance provider on the official website of the company or you can refer to the annual report on claim settlement ratio of the IRDAI.
Also Read: Difference Between Incurred Claim Ratio And Claim Settlement Ratio
Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.