Claim Settlement Ratio of top Health Insurance companies in 2019-2020

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    These days, health insurance policies have become an integral part of everyone’s financial portfolios. This COVID-19 has forced people to understand the value and worth of medical insurance. Moreover, healthcare costs are thriving rapidly, and without a health insurance plan, a medical emergency seems like a curse to many. Having a health insurance policy will not only assure you to get the best healthcare facilities but also lessens the financial burden, as the policy usually pays your hospital bills and medical expenses. Therefore, it spares you from financial turbulence and safeguards your funds.

    The markets are crammed with many insurance companies that offer diverse health policies with comprehensive coverage benefits. But having a good insurance company is not enough for a hassle-free claim process. If your selected insurer doesn’t respect your claim in an emergency, then what to do? That’s why you should consider the claim settlement ratio of the insurance company before making the final decision.

    The claim settlement ratio: This ratio helps you to know how trustworthy the health insurance company can be if you make a claim. Among all private insurance companies, HDFC ERGO General Insurance has the highest claim settlement ratio (99.80%) in the financial year 2019-2020.

    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)

    Incurred Claim Ratio: This ratio indicates the total amount of claims paid by an insurer against the total amount of premiums earned in a year.

    Incurred Claims Ratio = (total amount of claims paid / total amount of premiums collected) * 100

    Let’s take a look at the claim settlement ratios and incurred health claim ratios of popular health insurance companies.

    Claim Settlement Ratio of Health Insurance Companies 2019-20

    Insurers (Private and standalone health insurance companies) Claim settlement ratio (less than 3 months) Incurred health Claim ratio in 2019-2020
    HDFC ERGO 99.8% 69.01%
    Edelweiss General 99.72% 113.05%
    Go Digit 99.65% 51.83%
    Kotak Mahindra 98.68% 49.22%
    Bajaj Allianz 98.61% 81.96%
    ICICI Lombard 96.93% 69.90%
    Acko general 93.49% 21.08%
    Future Generali 93.34% 62.52%
    Tata AIA 92.82% 66.61%
    Bharti AXA 92.17% 77.50%
    Religare Health 100% 59.13%
    HDFC ERGO Health 99.99% 73.69%
    Max Bupa 99.91% 53.51%
    Star Health 99.9% 65.91%

     The incurred claims ratio clearly portrays the insurance companies’ capacity to pay claims filed by policyholders.

    What should be the ideal incurred claim ratio?

    A lower incurred claim ratio suggests that the insurance company has stringent claim processing or tough underwriting parameters. That’s why the company has rejected most of the claims of policyholders. It also portrays that the company is charging much a higher premium as compared to the benefits to its policyholders. So, you should discard a company that has a low incurred claim ratio.

    Does a policyholder prefer a company that has a higher incurred claim ratio?

    A policyholder may not choose a company that has a higher incurred claim ratio. The insurance companies that have more than 100% incurred claim ratio indicates the insurer has spent more money on settling claims than it received as insurance premiums from policyholders. This means the company is running at a loss. So, purchasing a health policy from this company could be a risker for policyholders.

    Some novice insurance players may have a higher incurred claim ratio because they may not have sold adequate policies to receive a substantial premium at the initial phase. Thus, these insurance companies may have a higher ratio (even above 100).

    So, what should be an incurred claim ratio?

     The insurers with incurred claims ratios less than 50% are not good for policyholders. The ideal incurred claims ratio should be between 75-90%.

    Claim repudiation Ratio (Claims rejected/Total claims) %

    This ratio suggests the percentage of claims declined by the insurer. A claim repudiation ratio of 20% means 20 claims are rejected out of 100.

    Claim rejection reasons

    • Fraudulent claim
    • Untimely intimation
    • The coverage is not covered under the health policy


    Claims pending ratio (claims outstanding/total claims)%

    This ratio suggests the number of claims that have not yet been settled (neither accepted nor rejected by the insurance company). Claims pending ratio 40% indicates 40 claims are not yet settled out of 100 claims.

    What is the difference between incurred claims ratio (ICR) and the claim settlement ratio (CSR)?

    Though these two sound similar, they both measure different things.

    • The claim settlement ratio (CSR) indicates the number of claims settled by the insurer against the total claims made in a year. On the other hand, incurred claims ratio measures the total amount of claims paid by the insurance company against the collected premiums.
    • The CSR depicts the goodwill and trustworthiness of the insurer in paying its claims, and ICR portrays the financial position of the company.
    • The CSR value can never exceed above 100% but the ICR can be.
    • Policyholders often expect a higher CSR, but a high ICR suggests that the insurer is using most of its premiums for claims settlement. This means the financial position of the company is not stable.


    Factors you should consider for claim settlement ratio of health insurance

    • Consistency: The company should have a consistent claim settlement ratio. That’s why you should check the last 5 years claim settlement ratio of the insurance company before purchasing a health policy.
    • Report by IRDA: Every year, the IRDA publishes the claim settlement ratio of all leading public and private insurance companies on its website. So, check it properly before making any decision.
    • The number of claims received by an insurance company: never forget to check the number of claims received by an insurance company in a financial year. This will help you to get an idea about how big and trustworthy the insurance company is.


    The above article gave you enough information about what is the claim settlement ratio for health insurance and how it plays an imperative role in your purchasing decision.