Top Health Insurers Claim Settlement Ratio in India

4 min read

When you compare health insurance plans and health insurance companies, you look at the coverage features offered, premium charged, number of tied-up hospitals, etc. But, the health insurance claim ratios are often ignored. The main reason for ignoring these ratios related to health insurance claims is a lack of knowledge. Since the ratios are calculated using a specified formula, many of you give it a miss either because you don’t know the formula or you don’t have the data at hand. However, these ratios about health insurance claims should be a parameter of comparison between different health insurance companies.

Types of Health Insurance Claim Settlement Ratio

There are two types of health insurance claim ratio. One is the claim settlement ratio and the other is the incurred claims ratio. Let’s understand what these ratios mean in the context of health insurance claims:

Claims Settlement Ratio

Claims settlement ratio measures the number of claims settled by the insurance company in a financial year against all the claims made on it. The formula for calculating the ratio is as follows:

Claims settlement ratio = (number of claims settled / total number of claims made) * 100

Incurred Claims ratio

Incurred claims ratio measures the amount of claims settled by the insurance company in a financial year against the total amount of premiums received in the same year. The formula for measuring incurred claims ratio is as follows:

Incurred claims ratio = (total amount of claims paid / total amount of premiums received) * 100

Interpretation of Health Insurance Claim Ratio

For the claim settlement ratio, the higher the ratio the better trust you can have on the insurance company in settling your claim. A higher ratio denotes that the insurance company settles its claims duly and thus increases the chances of the settlement of your health insurance claim. So, the higher the ratio, the better is the insurer.

For incurred claims ratio, a higher ratio is not necessarily the best choice. If the incurred claims ratio of the insurance company is more than 100, it means that the company is making a loss. It is paying more in claims than it is earning in premiums. This might be unfavourable for you as a loss making insurer would have a low solvency margin and might increase the premium rates to compensate for the loss. Similarly, companies with an incurred claims ratio lower than 100 are making a profit. They are earning more from premium collections than they are paying claims. Such companies might be interpreted to be charging very high premium rates. If the incurred claim ratio is below 50%, it is a red flag. Such companies are interpreted to incur huge profits whereas claims are minimal. This means that the companies are not charging reasonable amounts of premiums and that their premiums are inflated. Thus, interpreting incurred claims ratio is a bit relative in nature. Ideally, an incurred claims ratio of 60% to 85% is a safe bet.

Claim Settlement Ratio of Popular Insurance Companies in India

You might not be able to calculate the claim ratios of health insurance companies yourself because of the lack of data. As such, in the context of health insurance, the Insurance Regulatory and Development Authority (IRDA), calculates and publishes the claim settlement ratios of different health insurance companies. These ratios are published after each financial year. For the financial year 2016-17, here are the incurred claims ratios of different insurers:

Name of the insurance company Incurred claim ratio
National Insurance Company Limited 127%
The New India Assurance Company Limited 103%
The Oriental Insurance Company Limited 118%
United India Insurance Company Limited 139%
Bajaj Allianz General Insurance Company Limited 79%
Bharti AXA General Insurance Company Limited 77%
Cholamandalam MS General Insurance Company Limited 40%
Future Generali India Insurance Company Limited 79%
HDFC Ergo General Insurance Company Limited 51%
ICICI Lombard General Insurance Company Limited 90%
IFFCO-Tokio General Insurance Company Limited 104%
Kotak Mahindra General Insurance Company Limited 52%
Liberty Videocon General Insurance Company Limited 74%
L & T General Insurance Company Limited 41%
Magma HDI General Insurance Company Limited 181%
RahejaQBE General Insurance Company Limited 127%
Reliance General Insurance Company Limited 98%
Royal Sundaram General Insurance Company Limited 62%
SBI General Insurance Company Limited 53%
Shriram General Insurance Company Limited 39%
TATA AIG General Insurance Company Limited 57%
Universal Sompo General Insurance Company Limited 86%
Apollo Munich Health Insurance Company Limited 55%
Cigna TTK Health Insurance Company Limited 48%
Aditya Birla Health Insurance Company Limited 111%
Max Bupa Health Insurance Company Limited 52%
Religare Health Insurance Company Limited 51%
Star Health & Allied Insurance Company Limited 61%

The claim settlement ratio of health insurance companies is not published by the Insurance Regulatory and Development Authority (IRDA). It is, usually, calculated and published by the insurer itself. You can find the claim settlement ratios on the insurance company’s website and also on the websites of reputed online insurance brokers who deal with multiple insurance companies.

Limitations of claim ratios

Both claim settlement ratio and incurred claims ratio have a limitation. The time taken by the insurer is not reflected under any of these ratios. If the claim settlement ratio is high but the company takes a lot of time in settling its claims, it is not good for you. You need an insurer whose claim settlement is quick and hassle-free. Similarly, for newly formed insurance companies, the incurred claim ratio might be in the extreme. It might either be higher than 100% or below 50%. The reason for the former is that the company has earned limited premiums during its initial years whereas the incidence of claims is higher. For the latter case, the company might not have incurred substantial claims in the initial years whereas premium collections can be quite good.

So, though the health insurance claim ratios are important parameters, you should not judge an insurance company or its health insurance plans solely on these ratios. Other parameters should also be taken into consideration like the company’s network of hospitals, the plan’s coverage features, premiums charged, etc. Only after considering every parameter should you buy the best health insurance plan.

Choose wisely!

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Gayatri Prabhu, Head-Digital Business at Mahindra Insurance Brokers Limited (MIBL) is one those few digital leaders who has the width and depth that is required to execute an ROI driven holistic digital strategy. She cuts through the noise, identifies the critical levers and leads her team to successful execution of the defined strategy. Her core mantra to win new and retain existing customers is: understand the consumer behavior and craft experiences around it.

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