Health Insurers Must Be More Transparent While Settling a Claim Says IRDAI

These days, people have adequate knowledge about the importance of health insurance policies, but they have a scant idea about the health insurance claim settlement process. They don’t have any clear idea when they need to raise a claim for their treatments to get rejected by the insurance company. So, before purchasing a health insurance policy, every customer should check the latest claim settlement ratio of health insurance companies 2020 IRDAI.

What is the claim settlement Ratio in Health Insurance?

The claim settlement ratio gives you an idea about how reliable the health insurance company can be if you raise a claim. 

For example, the HDFC ERGO health insurance claim settlement ratio is 99.80% (for 2019-2020), and the TATA AIG health insurance claim settlement ratio is 90.49%.

Claim settlement ratio= (Total claims calculated)/(Total reported claims + outstanding claims at the beginning of the years – outstanding claims at the end of the year).

To make the claim settlement process hassle-free, IRDAI instructed insurance companies to be more transparent in their health insurance claim settlement process. In case of rejection of the claims, companies should inform the reasons to policyholders. In the circular, the IRDAI mentioned that every company should make a clear and transparent communication to policyholders in every step of the claim settlement process.

Every insurance company should install a system that will help policyholders to track the status of cashless requests/claims filed with the insurance company/TPA through the website/portal or app. The status must include everything from the receipt of a request to the clearance of the claim along with the decision.

IRDAI also mentioned that when TPAs are handling and settling the claims on behalf of insurance companies, policyholders should be intimidated regarding all communications as well as location to track the claims.

What is the claim repudiated Ratio (Claims rejected/Total claims) %?

This ratio indicates the percentage of claims rejected by the insurance company. For example, a claim repudiated ratio of 20% means 20 claims are rejected out of 100.

Some common reasons for claim rejection in the health insurance claim process

• If a policyholder initiates a fraudulent claim
• If you claim for an exclusion of your health insurance policy plan
• If you raise a claim for a lapsed insurance policy
• If you make a claim for the treatment that is not mentioned in your health insurance plan
• Getting treatment for a pre-existing disease without completing the waiting period

In its latest circular, IRDAI also mentioned that insurance companies couldn’t reject or repudiate a claim just based on “presumptions and conjectures.”

Even in its previous Regulations of 2016, IRDAI also mentioned that whenever a claim is denied or repudiated, the insurance company should mention the reasons for the denial or repudiation to policyholders while referring to the corresponding policy conditions.

The authority has also instructed insurance companies to provide every detail of the payments, including the amounts disallowed and the reasons for the amount excluded. Moreover, the companies also refurbish their grievance redressal procedures and the insurance ombudsman, along with their detailed addresses of the respective offices. All claims should be processed in a translucent, immaculate, and efficient way within the stipulated timelines. IRDAI also mentioned that every insurance company and TPAs should follow these instructions without any failure.

These instructions and regulations don’t apply to the two specialized PSU insurers (AIC and ECGC). These two particularly work in crop insurance and export credit insurance sectors, respectively.

Certain things you should understand regarding the claim settlement ratio in the medical insurance claim procedure

• Know the claim settlement ratio of health insurance companies

These days, many health insurance companies have impressive claim settlement ratios because they want customers to choose them over their contenders. Customers think these companies are legitimate and trustworthy. Policy buyers are inclined to purchase various health insurance policies from these companies.

• Consider all products of the company

Usually, the claim settlement ratio of an insurance company is estimated for all its products. For example, the claim settlement ratio of a life insurance company encompasses the claim settlement of all the plans it offers, ULIPs, and so on. So, before making any commitment, consider the CSR for all products of an insurance company.

• Consistency

Always select a company that has maintained a healthy claim settlement ratio over the past financial years. It would be prudent to check a company’s last 5 years’ claim settlement ratios before investing a single penny.

• Report by IRDAI

The IRDAI publishes the claim settlement ratio of all leading public and private insurance companies on its website for every financial year. So don’t forget to visit the website of IRDAI and compare the ratios of various companies before making a purchase decision.

• The number of claims received by an insurer

Take a look at the number of claims received by an insurance company in a financial year. This will help you to make an idea about how trustworthy and big the insurance company is. Now, you can make a firm decision whether to continue with this company or not.

The claim settlement ratio of health insurance companies plays an imperative role in your insurance purchase decision. This ratio portrays how efficiently an insurance company settles your claim in case of a healthcare emergency. By comparing the ratios of various companies, then only make a concrete decision and purchase the best health policy from a company with an impressive claim settlement ratio.