Health insurance: Checking claim ratio isn’t enough

When evaluating health insurance providers, assessing claim settlement ratio and complaint rate is crucial, but it is not sufficient. To make an informed decision, prospective buyers must consider additional factors.

Two key metrics provided by Ditto Insurance, a licensed corporate agent for multiple insurers, include three-year average claim settlement ratio by policy count and the number of complaints per 10,000 claims. However, buyers should also weigh the insurer's scale, track record, product portfolio, and hospital network.

Galaxy Health and Narayana Health, for example, have limited operational history, resulting in limited data on their performance. It is essential to recognize that claim settlement ratio is calculated by policy count, not premiums, and may be affected by the size of the insurer.

Ditto Insurance's complaint data may encompass broader general insurance business rather than solely health insurance, depending on their disclosures. In some instances, a high initial claim settlement ratio could indicate a small volume of early claims for new insurers.

The claim settlement ratio formula calculates the percentage of claims paid out, considering opening claims, claims reported, claims closed, and closing claims. It is applicable to the total health insurance segment for non-life insurers, including health, travel, and personal accident insurance products. This data covers both group and retail segments.

To obtain CSR (Claim Settlement Ratio) information, insurance companies must disclose it in Form NL37 or provide data in their Q4 filing. Complaint data comes from insurers' public disclosures, grievance disposal, and Irdai's annual report. The complaints metric is calculated as formal grievances per 10,000 claims.