Life Insurance - Claim Settlement Ratio 2011-12

With online portals such as Policy Bazaar, comparing life insurance plans now is easy, buying them is even easier. It is filing a claim and getting the claim amount that’s the real tough nut to crack. And we are not insulting your smartness; we know that you’ll make your way around it. But God forsake, if something happens to you and your dependents have to file a claim, they might not just make it that smart.

This takes us to the million dollar question – How to make sure your claim will be settled?

The answer is to always check the Claim Settlement Ratio of the insurer you are buying from. Claim Settlement Ratio is the ratio of settled claims to the total claims filed in a given accounting period.

Claim Settlement Ratio = No. of Claims Settled / Total No. of Claims Filed

So, a 95% claim settlement ratio implies that of a total of 100 claims, 95 claims were settled by the insurer. The 5 claims stand either repudiated or pending. 

Here’s the Claim Settlement Ratio (in decreasing order) for the year 2011-12.

Source: IRDA Annual Report 2011-12

Limitation of Claim Settlement Ratio

Claim Settlement Ratio is surely a way to know the chances a life cover will be provided when your family needs it. But it gives no idea about the actual time period taken by the insurer to pay out the money.

So, there can be two insurers with the same ‘Claim Settlement Ratio’ with one of them settling a claim within a month while the other taking half an year to do the same. So, how to make sure, your claim will be settled in a timely manner?

Along with the CSR, you should also check the usual time taken by the insurer to settle a claim. Read More -

http://knowledge.policybazaar.com/life-insurance/item/1124-settling-your-claims-who-does-it-faster.html

Health Insurance - Incurred Claim Ratios (for 2011-12)

Every insurer keeps the best foot forward when it comes to selling its insurance plans. But it is the settlement of claim that decides how good or bad an insurer really is.

Every policyholder pays the premium with a trust on his/her insurer that he’ll be provided financial assistance in times of need, in a simple, smooth and timely manner. There are certain parameters to measure this trust. One such parameter is Incurred Claim Ratio. 

What is Incurred Claim Ratio?

It is the ratio of net claim settlement cost incurred by the insurer to the net premium earned for a given accounting period.  

Incurred Claim Ratio = Net Claims Incurred / Net Earned Premium

So, a 90% incurred claim ratio implies that for every 100 rupees earned as premium, 90 rupees were spent on the claims settled by the insurer. Thus, 10 rupees is the net profit of the insurer. Unlike claim settlement ratio, incurred claim ratio can be above 100%. Obviously, that would imply that the insurer suffered a financial loss during that particular year.

How is it different from Claim Settlement Ratio?

Chances are thick that you stumbled upon this article while searching for Claim Settlement Ratio. These two are often confused but are quite different. Claim Settlement Ratio is the ratio of settled claims to the total claims filed in a given accounting period.

Claim Settlement Ratio = No. of Claims Settled / Total No. of Claims Filed

So, a 90% claim settlement ratio implies that of a total of 100 claims, 90 claims were settled by the insurer. The 10 claims, however, were outstanding or denied.

How important is Incurred Claim Ratio for a Policyholder?

Incurred Claim Ratio is a reflection of how much an insured can count on his insurer on getting his claim settlement amount, when he makes a claim.  The thumb rule is, higher the ICR, higher level of trust an insured can put on his insurer. It's a way of rating insurance companies. 

Also, as a policyholder you stand in a better position to negotiate with an insurer with a low incurred claim ratio.

What ICR doesn't tell you?

As can be seen in the formula, Incurred Claim Ratio doesn’t take into account the time period taken by the insurer to process and settle a claim. So, there can be two insurers with the same ‘incurred claim ratios’ with one of them settling a claim within 3 months and the other one procrastinating the settlement up to 1 year.

The health insurance incurred claim ratio of the insurers for 2011-12 (in decreasing order) is given below:

Source: IRDA

The health insurance incurred claim ratio of stand alone health insurers for 2011-12 (in decreasing order) is given below:

Source: IRDA

Health Insurance Claim Settlement Ratio (FY 2009-2010) 

Health insurance is the need of the hour. Hospitalization expenses are increasing at a rapid pace. A simple consultation these days cost Rs 500. Being admitted in a hospital can cost thousands of rupees. Using savings to bear hospitalization expenses does not make any sense. Health insurance is a good solution to take care of medical expenses. You can get a good cover with relatively low premium. With just around Rs 3-4 thousand, you can get individual health cover of Rs 2 lacs.

Before buying health insurance, you should access many factors. Apart from premium, check the coverage, benefits such as no claim bonus, flexibility to change cover, maternity cover if required etc.

Health insurance claim settlement ratio is also among the factors to check before buying health insurance. A health insurance claim settlement ratio tells us about claims being settled by the insurer. Suppose if total of 10 claims are received by insurer and 6 is settled by them then claim settlement ratio is 60%. The rest 4 could be either rejected or outstanding.

We have calculated health insurance settlement ratio of major health insurance companies. The data is computed directly from health insurance company’s websites. The formula used is:

Health insurance settlement ratio= (Health claims settled/total claims) %

Health Claim Settlement Ratio for Financial Year 2009-2010 is:

Source: Public Disclosure of Insurance Companies

For 2011-12 claim settlement figures, check out - 

http://knowledge.policybazaar.com/health-insurance/item/1122-health-insurance-incurred-claim-ratios-for-2011-12.html

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Health Insurance- Claim Settlement Ratio

There are many health insurance plans in the market. Most of the health plans are very comprehensive with many benefits including no sub limits on room rent, maternity benefits, lifelong renewal etc. There are very few things which sets them apart. The basic premise of health insurance is to provide financial assistance in times of need. It could be cashless or reimbursement  and as smooth as possible. However there has been regular complaints about the delay in services on the part of TPA or health insurer.

Therefore before randomly choosing a health insurance plan, one should always check the claims data. The claims data will apprise you of total number of claims, how many claims have been settled and rejected. Some claims remain outstanding as well.

The health settlement ratio determines the % of claims solved by the insurer. For instance- claim settlement of 80% implies that out of total of 100 claims, 80 claims have been accepted by the insurer. The rest 20 claims have been denied or remain outstanding.

Health insurance claim settlement has been calculated as the following formula-

Health insurance claim settlement ratio = claims settled/ (total claims-claims rejected)%

The health insurance claim settlement ratio of the insurers for the Quarter 2,  2011 is given below:

Along with health settlement ratio, you should keep in consideration number of claims outstanding and claims rejected. If your claim is always stuck in paperwork, it would not make much sense. Hence try to find out the time taken by the insurer to solve the claim as well.

For 2011-12 claim settlement figures, check out -

http://knowledge.policybazaar.com/health-insurance/item/1122-health-insurance-incurred-claim-ratios-for-2011-12.html

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Health Insurance Claims- Things you should look before buying health insurance

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 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 claims-claims rejected) %

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.
The claim settlement data for quarter ended Dec 31, 2010 of the insurers is given below:

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