All you need to Know about Claim Settlement Ratio

By Ruchi Gohri
  | Published: 26 October 2021

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Health Insurance

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Buying health insurance for?
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  • Investor

Buying the right health insurance policy from the right health insurance provider is important if you want to settle your claims effortlessly. When it comes to buying health insurance, there are a plethora of options and various other factors that can leave a new policy buyer feeling confused.

Before buying a health insurance policy, you must analyze your requirements along with a few other important parameters like your budget, age, medical history, etc. It’s important that you compare health insurance plans after considering all the choices that are available to you. Doing this will help you in finding a sound insurance plan that fulfills both your budget and requirement.

One such important but the overlooked parameter is the claim settlement ratio. A claim settlement ratio helps you in determining the rate of claims that are settled by the insurance provider. This is a direct reflection of the ethics and integrity of the provider.

If you want to know more about the claim settlement ratio, then just keep reading. We’ll walk you through its uncontested importance and how important it is to consider before buying a health insurance policy in the UAE.

What is a Claim Settlement Ratio?

The Claim Settlement Ratio of a health insurance company is a critical factor that tells the customers about the company’s ability to settle insurance claims on time. If an insurance provider fails to pay the insurance claim, the whole idea of buying the health insurance policy becomes useless.

An insurance provider’s claim settlement ratio reflects its liability which helps the policy buyers bag the right health insurance policy from the right insurer. A good claim settlement ratio of a health insurance company lies above 80 percent. If the claim settlement ratio of an insurance company ranges between 80 to 90 percent, you need not think twice before buying a health insurance policy from them.

However, the claim settlement ratio is not the only factor you need to consider when choosing an insurance company. There are many other factors such as network hospitals, business volume, solvency ratio, and more that play a critical role when it comes to buying a health insurance policy.

How to Calculate a Claim Settlement Ratio?

Here is a simple formula to calculate the claim settlement ratio of an insurance company in the UAE.

Claim Settlement Ratio = Total number of claims paid or settled / (total number of claims received + total number of outstanding claims at the beginning of the year)

For example, if an insurance company gets 1,000 claims registered in a year and they settled 900 rejecting the remaining 100. Then, the claim settlement ratio for the said insurance provider will be.

Claim Settlement Ratio – 900 / (1,000) = 90 per cent

Why is the Claim Settlement Ratio of a Health Insurance Company Important?

Here are a few key points that determine the importance of a claim settlement ratio of a health insurance company. With the help of this ratio, you can figure out whether your chosen insurer is suitable for buying a health insurance plan or not.

  1. On-Time Settlement

The claim settlement ratio of an insurance company helps you find out the positive probability of whether the insurance company will be able to settle their health insurance claim on time or not. If the claim settlement ratio of your preferred insurance company is good, it means it will settle your claims without any hassle.

  1. Credibility

The claim settlement ratio of a health insurance provider reflects its credibility towards the health insurance policy buyers. With the claim settlement ratio data of the past few years, you can ensure that the performance of the insurance company has been consistent and settling insurance claims regularly.

  1. Peace of Mind

The claim settlement ratio of your health insurance company helps you have faith in their business performance. You can have peace of mind that whenever you are facing any financial challenges while getting medical treatment, your insurer will be there to support you financially.  

Conclusion

It is always advisable to go for an insurer with a good claim settlement ratio as it helps you settle down your medical bills without any inconvenience. Most insurance companies with an inferior claim settlement ratio offer lower insurance rates. Make sure you do not fall for them, or else the amount you will pay at the time when your claim will be rejected will be higher than the amount you will save on your insurance premiums.

Hence, buying a health insurance policy with an insurer with a good claim settlement ratio at higher insurance rates is beneficial in the longer run. You can consider using online health insurance comparison tools to analyze the claim settlement ratio of your chosen insurance company. Or you can call our helpdesk to understand what is best for you based on your medical and financial preferences.

Ruchi Gohri
Ruchi Gohri0 Post

Senior Content Writer | She has a penchant for writing and with over 5 years of experience, she plays around with words elegantly, crafting simple content for all to read. In her free time, she loves her couch either to read or catch on to her sleep.