Claim Settlement Ratio

Here’s Why You Must Know About the Claim Settlement Ratio Before Opting for A Health Cover

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We all understand the importance of health cover. It is an important investment that protects our family in times of crisis. But what we forget is that health cover or health insurance is a legal document. It is a binding agreement between the insured and the company.

So, we must read the contents of the policy before buying it. Further, before buying a health cover, make sure you understand it in detail. Don’t miss out on important information like the sum assured and waiting period. Also, check the procedure to file a claim and claim settlement ratio. In a way, these two factors determine the ability of the company to pay in case of an emergency.

Read through the article to find claim settlement ratio meaning. The article will also include information on CSR importance and calculation.

What is claim settlement ratio?

As mentioned previously in the article, health insurance coverage is an important investment. But there are multiple insurance companies offering health cover. Hence, what factors do you need to consider when buying a health policy?

There are multiple factors you need to consider before buying a health policy. But the most important of all is CSR. So, this begs the question – what is CSR?

In simple words, CSR stands for claim settlement ratio. CSR represents the number of claims settled successfully by the company. The ratio is determined against the number of claims made to the company in a year. Further, it determines the ability of the company to pay in case of an emergency. So, a company with a high CSR must be preferred. A company with higher CSR is likely to settle your claim if a need arises.

Therefore, find the claim settlement ratio of a company before buying a health cover.

How to calculate the claim settlement ratio?

Health insurance companies calculate the settlement ratio by using a formal. Most companies use the same formula to calculate CSR. Further, the companies calculate CSR every year.

Claim Settlement Ratio Health Insurance formula is as follows:

CSR = Total Claims Settled / Total Claims Received + Outstanding Claims at The Start of The Year. 


The importance of CSR cannot be stressed enough. Hence, when buying a health cover, compare CSR and the premium amount. Moreover, health insurance companies with CSR of 80 percent and more must be preferred. As believed by experts, the ideal claim settlement ratio is 75-90 percent. Furthermore, new insurance companies can publish a higher CSR, be careful of such information.


What is the significance of the claim settlement ratio?

In the first place, we buy a health insurance policy for two reasons.

Buy Health Insurance - Claim Settlement Ratio
  • The first reason for buying a health cover is to protect our family in time of crisis or emergency
  • The next reason for buying health insurance is to get compensated for medical expenses incurred.

Therefore, if either of these reasons is not fulfilled, buying a policy is defeated. Hence, you must check the company’s ability before buying a policy. A company must have the capacity to settle your claim if and when it arises. But how do you check the ability of the company to settle your claim?

A simple answer to this question is there is no hard and fast rule to check the company’s capacity. As a general rule, find out the IRDA Claim Settlement Ratio of a company. CSR determines the credibility of the company. A company with a higher ratio is more reliable in paying the claim when made. Hence, check out the CSR of a company before buying a policy.

Furthermore, calculate the settlement ratio by using the formula mentioned above in the article.

Why consider the claim settlement ratio of a company?

The main purpose of buying a health insurance policy is protection that the company offers in an emergency. Health insurance companies repay the medical expenses incurred by the insured. Suppose the company can’t repay, then the policy’s purpose is not fulfilled. So, it is necessary to understand the capacity of the company to settle a claim.

CSR determines this capacity. The claim settlement ratio shows the company’s credibility to settle a claim. It indicated the reliability of an insurance company. 

A policyholder can determine the service of the company towards its customers. Or how genuine is the company in settling the claims made by the policyholders? Furthermore, a CSR helps us understand the history of the companies.

Claim Rejection - Claim Settlement Ratio

This being said, sometimes claims can get rejected. There is a number of reasons why an insurance claim gets rejected. It can be the fault of the insured by providing incorrect information. On the other hand, the insurance company can also be at fault. They may not settle a claim due to incompetence or lack of trustworthiness. 

Hence, it is not possible to predicate if all our claims will be settled. However, CSR offers information that helps decide the company’s trustworthiness. 

Where can I find the CSR of a company?

The best place to look for the company’s CSR is on their website. Apart from this IRDAI Claim Settlement Ratio can be found on the official website. IRDAI is the official body that governs the insurance company. Further, the body publishes the claim settlement ratio for health insurance companies every year.

Bottom Line

To sum it up, CSR is an important factor in determining the company’s credibility. IRDAI and available on the website publish the ratio of an insurance company. Further, when comparing, two insurance companies consider their CSR. The CSR represents the reliability and credibility of the insurance company. It also helps an insured determine the capacity of the company to settle a claim when it arises.


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