When looking for health insurance policies, you may have come across the term 'claim settlement ratio'. Insurance companies often advertise this term as an indicator of their reputation and reliability. Many people might not be aware of the term and what it implies. In this article, we have attempted to give you the lowdown on claim settlement ratio and what it could do for you. 

In simple terms, the claim settlement ratio of a health insurance company is the ratio of claims settled by the company versus claims received by the company. It is usually represented in percentage. A high ratio implies that the company is efficient at solving claims and could be a good choice for a prospective insurance buyer. 

(Total number of claims settled) / (Total number of claims received) X 100 = Claim settlement ratio

For example, insurance company Z received 200 claims in one year. Out of the 200 claims, it settled 180 claims and rejected 20 claims. So, the settlement ratio for Z is 90% as it rejected 10% of claims. 

The Insurance and Regulatory Development Authority of India (IRDAI) publishes the claim settlement ratio of registered insurance providers annually. This keeps the process fair and ensures healthy competition between insurers. 

How can a claim settlement ratio benefit you? 

It is good to know an insurer's claim settlement ratio because this figure:

1.Briefs you about the company's claim settling history so that you can make more informed decisions while choosing.

2. Gives you a degree of assurance for the times when you will make a claim on your health insurance. During medical emergencies, we expect our insurer to understand our predicament and make an easy claim settlement once we have provided the required documents. A good claim settlement ratio can ease our worries regarding this. 

3. Acts as an important point of consideration while comparing health insurance policies to buy or renew. 

Few points to remember while understanding the claim settlement ratio of a company-

• Claim settlement ratio is calculated for the claims made on all the policy products of the insurer. For example, the claim settlement ratio for a general insurance company will include the claims settled for motor insurance, home insurance, travel insurance, health insurance, as well as any other offerings of the company. There is no way to ascertain the claim settlement ratio of health insurance only. 

• The claim settlement ratio is not the only indicator of whether the company is likely to settle your claim or not. A small insurance company may have a high ratio as it may have a smaller number of clients and thus, a small number of claims made. Such a company may not be equipped to handle a large number of clients or frequent claims. 

Therefore, it is advisable that you look at several other factors alongside the claim settlement ratio while choosing an insurer for health insurance. Here are some major factors - 

• Comprehensive coverage for various types of treatments and procedures

• Coverage for regular check-ups, vaccinations, and tests

• An extensive network of associated hospitals

• Dependable customer services

• Easy applicability, claim and renewal processes 

We hope this article has increased your understanding of the importance of claim settlement ratio in health insurance.