In the face of a relentless surge in medical inflation and the changing lifestyle, health insurance plans have emerged as an absolute necessity. In India, there are more than a dozen companies, each offering a wide array of the best healthcare insurance plans. With each plan boasting its unique selling propositions, the choices can quickly become overwhelming for individuals searching for the perfect health coverage.
One of the most important factors to consider before buying healthcare insurance is the claim settlement ratio. But what is a claim settlement ratio? How does it impact your insurance? This article will explain why is it essential to consider the claim settlement ratio before buying healthcare insurance. Before that, let us understand what is claim settlement ratio.
What is the Claim Settlement Ratio?
In healthcare insurance, the ratio between the total number of claims received by an insurance company and the number of claims successfully resolved by the insurer within a given fiscal year is known as the claim settlement ratio (CSR). This ratio indicates the ability of the insurer to fulfil its customers’ claim obligations.
For instance, if an insurance company manages to pay 97 out of 100 claims from various policyholders within a specific financial year, the CSR for that healthcare insurance business for that year would be 97%.
What are the Types of Claim Settlement Ratios?
They are two types of claim settlement ratios:
1. Cashless Claim Settlement Ratio
Under the cashless claim settlement method, policyholders can avail of medical treatment at network hospitals affiliated with their healthcare insurance provider. In this process, the insured individual does not need to pay upfront to the hospital for the treatment and medical services received.
Instead, the insurer directly settles the bill with the hospital, subject to the approved claim amount. The policyholder may only be required to pay co-payments or expenses exceeding the sub-limit clause chosen during the plan purchase.
2. Reimbursement Claim Settlement Ratio
In the reimbursement claim settlement method, policyholders seek medical treatment at hospitals not part of the insurer’s network. Under this procedure, the insured individual pays for the treatment at the hospital and later applies for reimbursement from the insurance provider, subject to the approved claim amount.
The insurer is liable to pay the entire claim amount after considering any voluntary or compulsory sub-limits, deductibles, and other policy terms chosen by the policyholder when purchasing the health insurance policy.
How is Claim Settlement Ratio Calculated?
The Claim Settlement Ratio (CSR) of an insurance company is determined by the Insurance Regulatory and Development Authority of India (IRDAI) using a specific formula. The equation reads as follows:
(Total number of claims settled / Total number of claims received) x 100 = CSR
The resulting value is presented as a percentage. For example, if an insurance company has a CSR of 80%, it means that out of every 100 claims raised by its policyholders, the company settles and pays out 80 claims.
How to Choose the Right Healthcare Insurance Based on Claim Settlement Ratio?
When selecting a good healthcare insurance plan, it is vital to consider the healthcare insurance company’s claim settlement ratio. Here are some important points that highlight its significance.
1. Probability of Hassle-Free Claims
A higher claim settlement ratio indicates a positive probability that the health insurer will settle one’s claims on time. It ensures that one can avail the necessary financial support without facing unnecessary challenges or delays.
2. Performance of the Company
Reviewing the claim settlement ratios for the past five years is essential to gauge a company’s performance. A company with a solid track record of settling claims is more trustworthy, giving one confidence in them.
3. Credibility of the Company
Examine the claim settlement ratio issued by the IRDA to check the credibility of a healthcare insurance company. A higher ratio indicates the insurer’s ability to meet claim obligations and financial stability.
Conclusion
The claim settlement ratio is a crucial factor to consider when choosing the best health insurance plan. Thus, before buying healthcare insurance, you must consider the CSR rate of the healthcare insurance. It ensures that one will get the desired financial assistance in time of need.
If one is looking for comprehensive and reliable healthcare insurance solutions, contact Niva Bupa Health Insurance. With a track record of high CSR, Niva Bupa offers a wide range of health insurance policies.
