Whenever I find time, I enjoy listening to call records of our advisory team with our clients. It’s great learning, and is full of interesting insights. One question which is very hot amongst customers is regarding Claim Settlement Ratio of Health Insurance Companies in India from IRDA. I presume that this is to understand how efficient Health Insurance companies are in servicing and settling claims.
While, understanding the previous claims payment track record of your selected Health Insurance Company is very important before one buys a mediclaim, claim settlement ratio is not the right parameter to measure a Health Insurance Company’s efficiency and philosophy towards settlement of claims. This is a huge myth. Surprised? Read on.
What is Health Insurance Claim Settlement Ratio?
Health Insurance Claim Settlement Ratio is simply the ratio of health claims settled to health claims submitted, in a particular duration of time. It measures the proportion of claims settled and paid, against claims submitted. A 100% Claim Settlement Ratio means all claims submitted are settled. If the ratio is less than 100%, means the claims are rejected.
To understand, health insurance claim ratio, we need to get into the scenarios when claims are rejected?
When are Health Insurance Claims rejected?
Claims under Health Insurance are rejected primarily, due to the following 2 reasons.
1) Conditions under the Health Insurance contract:
Health Insurance in India is essentially a hospitalization risk insurance contract, which covers the unknown risks of hospitalization. Such a contract comes with certain conditions, like exclusions, waiting periods, and sub-limits on certain ailments. These conditions in the policy contract are primarily for 2 key reasons
<!--[if !supportLists]-->a) <!--[endif]-->To keep the policy viable
<!--[if !supportLists]-->b) <!--[endif]-->To keep the policy viable, at an affordable premium.
Claims are rejected or deducted, when they fall into the exclusion, waiting period or sub-limits under the policy. Read our article on exclusions and conditions in the health insurance policy here.
2) Misrepresented Proposal Forms, Fraudulent Claims:
Claims could be rejected, deducted, due to fraud or citing misrepresentation of facts.
<!--[if !supportLists]-->a) Exorbitant charges, billed by the hospital or the treating doctor.
<!--[if !supportLists]-->b) Misrepresentation of facts in proposal form, resulting in cancellation of policies. This usually happens when you just sign the proposal form, and leave the form to be filled by your agent/adviser.
<!--[if !supportLists]-->c) Fraudulent claims, by a nexus of hospital, patients etc.
Given the above scenarios, there are bound to be deductions and denials of claims. You would agree, that such deductions or denials, being “under contract”, cannot be linked to the efficiency of claims settlement of Insurance Company. In fact, denying fraudulent claims reflects the efficiency of the Insurance Company.
A Health Insurance company’s business model works on the platform of underwriting and correct estimation of probability of claims. Claims have to be paid as per contract, and claims with misrepresentations have to be rejected for the Health Insurance Company to survive.
How to ensure your Health Insurance Claim Settlement is 100%
So, now that you know that Health Insurance Settlement Ratio is not the right parameter, how do you measure the efficiency of the claims settlement of an Insurance Company you are considering?
Honestly, there is no perfect answer to this. But here are some very important things you should consider, ensure know about, before signing up on a health insurance:
- Beat the laziness, and old habits, and ensure you fill your proposal form yourself. Ensure your declarations related to past and current health conditions are complete. In case you are taking policies for your parents, or family members, ensure you confirm the health declarations with them.
- In our internal analysis, more than 95% of claims (this is not an exaggerated figure) are rejected, under valid terms and conditions of the policy. Hence, I strongly recommend you understand the terms and conditions of the mediclaim you are considering, very well, with your health insurance advisor, before you sign up.
- Additionally, get insights and the feel on experience from your Health Insurance Adviser, preferably a health insurance broking firm, which deals with all Insurance companies, and also provides professional claims assistance to their clients.
- FInally, ensure you are aware of the health insurance claim intimation and submission timelines, and you adhere by them.
Finally, in the rare case, where your claim is rejected against the terms and conditions of the health policy, you need to take the grievance route detailed here.
In short, health insurance claims settlements, to a large extent, are in your control. Awareness of the terms and conditions of the health insurance policy, and filling your mediclaim proposal form yourself, will improve your personal health insurance policy’s claims settlement ratio sizeably.
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Other Health Insurance Articles you may be interested in:
IRDA to issue Health Claims Settlement Rules
Why you should renew your Health Insurance?
Room Rent Limits and their implications on Claims in Health Insurance