health Insurance Claim Ratio

Health Insurance Claims Ratio- Things You Should Look Before Buying Health Insurance

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There has always been a doubt in customers mind about whether private company will keep its side of the bargain i.e. it will settle the claim or not. A customer spends premium annually which will cover his medical expenses but there’s always concern in his mind about the claim settlement.

There are three vital insurance claim ratios that one must understand:

  • Claim settlement ratio
  • Claim repudiation ratio
  • Claim pending ratio

Claim Settlement ratio tells us about the claim solving ability of the insurer. If claims are intimated and the insurer solves those, claim settlement ratio would be good. Higher claim settlement ratio implies that majority of claims are getting solved. Example- An insurer has 60% claim settlement ratio which means that insurer settles 60 out of 100 claims.

Health insurance settlement ratio has been calculated as: = (Total Claims Settled)/ (Total Reported Claims + Outstanding Claims at Start of Year – Outstanding Claims at End of Year)

This is thus the proportion of claims (by number) accepted and paid by the insurance company during the year. The complementary number (i.e 1-Settlement Ratio) gives the total proportion of cases that were unfavorably closed either as a repudiation or as a closure.

Claim repudiation ratio tells us about the percentage of the claims rejected by the insurer.

Example- Claim repudiation of 20% means 20 cases out of 100 are rejected.
Claims repudiation ratio= (Claims rejected/total claims) %
The reasons for rejection could be false claims, untimely intimation, coverage not covered under the policy etc.

Claims pending ratio tells us about the outstanding claims that have not been settled either way- neither accepted nor rejected.
Example- Claims pending ratio of 40% would mean 40 claims out of 100 are yet to be solved.
Claims pending ratio= (Claims outstanding/total claims) %
Health insurance claims could remain outstanding as a result of unfurnished information like doctors certificate. The insurer takes time to validate the expenses incurred during hospitalization.

How does claims ratio data help me?

Claims data let you understand the history of insurer claims handling process. It should also be noted that new insurers typically would have lower settlement ratio. That is because claims filed so early could probably mean that it could be a fake. Yet claims data does enlighten us in making analysis of companies which have been operating for same period. Even though genuine claims are rarely rejected, knowing about claims does help you arrive at the final decision. If you think that two insurer products have more or less same benefits, knowing that one insurer has 90% claim settlement could clinch the deal.

Policybazaar view:

Health insurance claims are mostly accepted. That’s because of insurer’s service of network hospitals where cashless facility is available. In case of non network hospitals also, as long as treatment is within coverage and stipulated requirements has been fulfilled, claims will be accepted. It must be understood that no insurer rejects genuine claim.

Data source: Public Disclosure NL-25 of Insurance Companies

Data on Settlement Ratio for Health insurance for Financial Year 2015-16 (Updated as at 27 Mar 2017):

Insurers

% Claims Settled

Apollo Munich

89%

Religare

87%

Star Health

79%

Max Bupa

86%

Cigna TTK

94%

HDFC Ergo

77%

Royal Sundaram

90%

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