When it comes to health insurance, one of the most important aspects that individuals must consider is the claim settlement ratio of the insurance company. This is the percentage of claims that an insurer settles every year compared to the total number of claims made. In other words, it indicates how efficient a health insurance company is in settling claims.
What is a ‘claim settlement ratio’ in health insurance?
The claim settlement ratio is an essential factor in choosing the right health insurance policy. It gives customers an idea of how reliable the insurer is when it comes to handling claims. A high health insurance claim settlement ratio indicates that the insurer addresses the claims made by the policyholders efficiently. A good claim settlement ratio also indicates that the health insurance company has a strong financial standing. This proves crucial in covering the costs of medical treatment.
Apart from the claim settlement ratio, there are two other ratios that one must consider; claim repudiation ratio and claim pending ratio.
Here's an example of how claim settlement ratio works:
- Total number of claims filed: 1,000
- Number of claims settled by the insurance company: 950
- Number of claims not settled or rejected: 50
To calculate the claim settlement ratio:
Claim Settlement Ratio = (Number of claims settled / total number of claims filed) * 100
Claim settlement ratio = (950 / 1000) * 100
So, in this case, the claim settlement ratio becomes 95%.
Claim repudiation ratio
Claim repudiation ratio is the percentage of claims rejected by the insurer due to various reasons. Insurers reject the claims mostly because of fraud, non-disclosure of pre-existing medical conditions, or incorrect information provided by the customer.
Claim pending ratio
Claim pending ratio is the percentage of claims not settled by the insurance company within the standard timeframe.
