What is claim settlement ratio in health insurance ?

What Is the Importance of Claim Settlement Ratio (CSR) in Health Insurance? When you buy health insurance, you want peace of mind that the insurer will pay your claims without unnecessary hassles. That’s where the Claim Settlement Ratio becomes essential; it shows you how many (number) claims an insurer settles against total claims filed in a financial year. Here’s why CSR matters to you: 1) A higher CSR means the insurer is more likely to approve valid claims. 2) It helps you quickly compare insurers based on reliability. 3)A low CSR can signal delays or frequent rejections. 4) It reflects the company’s overall claim-handling strength and financial health.

According to IRDAI’s Annual Report, more than 11% of health insurance claims in India were rejected in 2023–2024, and 6% were pending as of March 2024. This underscores the importance of choosing a trustworthy insurer who settles claims promptly when it matters most.

Let’s take a quick look at how claim payouts worked as of 2023-24:

Health insurers processed over 2.68 crore claims, paying out ₹83,493 crore in total. On average, each claim paid was ₹31,086. About 66% were settled via cashless mode, while 39% went through reimbursement; a small portion used both. Third-Party Administrators (TPAs) handled 72% of claims, while 28% were managed in-house. 

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These figures highlight the significance of knowing your claim process, including the nuances of TPA vs in-house and cashless vs reimbursement, to ensure a smoother experience when you need it most.

This guide will explain what CSR means, how to check it, and which insurers have the best track record. We’ll also cover other key factors to consider so you can make a smart, well-informed choice for your health insurance.

Regulatory Insight: IRDAI mandates insurers to comply with the following: 1) Insurer shall grant final authorization within three hours of receiving a discharge authorization request from the Hospital. In no case shall the policyholder be made to wait to be discharged from the Hospital. 2) If there is any delay beyond three hours, the additional amount, if any, charged by the Hospital shall be borne by the Insurer from the shareholder’s fund. 3) In the event of the death of the policyholder during the treatment, the Insurer shall: a) Immediately process the request for claim settlement. b) Get the mortal remains (dead body) released from the Hospital immediately

Which  are the 10 leading Health Insurers by CSR? 

Let’s take a look at these 10 leading performers by Claim Settlement Ratio:

Insurer	CSR % (AVG 2022-2025)
New India	98.91
Digit	98.66
HDFC ERGO	96.71
SBI General	96.14
Bajaj Allianz	96.78
Acko	96.5
Aditya Birla	95.81
National	94.61
Oriental	93.55
United India	93.79

How to Check Health Insurer’s Claim Settlement Ratio ? 

Before choosing a health insurance provider, it's smart to check its Claim Settlement Ratio. Here's how you can do that easily:

1. Regulatory reports – Review annual reports & statistics handbook published by Insurance Regulatory and Development Authority of India (IRDAI). These usually include updated CSR or claim data for all insurers.
2. Insurer's public disclosures – Visit your insurer's website or check this. Most reliable companies share CSR figures and claim performance openly.
3. Comparison websites – Only rely on information from trusted insurance aggregators that compile CSR and other health metrics data from official sources. Just make sure to verify the numbers through the original links.
4. Ask directly – Contact the insurer or agent and request CSR details from the past 3–5 years. Also, ask about claim rejection or delay rates.

Pro tip: Always check recent data and look for consistent performance over multiple years, not just a one-time high number.

How to Calculate Claim Settlement Ratio?

CSR indicates the percentage of claims an insurer settles out of the total claims received, providing insight into their credibility when fulfilling their obligations. 

Claim Settlement Ratio = Total no. of Claims Approved / Total no. of Claims Received x 100

Where the total number of claims approved = outstanding claims at the Beginning + claims reported during the period - claims closed - claims outstanding at the end.

We subtract closed claims because they are not admissible, and including them would distort the figures. For instance, if the insurer requested the documents and the policyholder failed to respond, they close the claims, so it wouldn't make sense to include that in the total amount claimed.

Here’s HDFC ERGO’s Public disclosure (NL 37 - Claims Data, Total Health Data)

Now, let’s see how the CSR works:

Claims outstanding (O/S) at the beginning of the year = 29,252
Claims Intimated during the year = 1,178,408
Claims Paid During the year = 1,150,913
Claims O/S at End of the year = 26,680
Claims Closed = 0

Applying the above formula gives us the CSR for FY 2024-25, at 97.45%

When calculating: 1) Only approved and paid claims are counted; rejected claims are not counted. 2) Some insurers count partial payments as ""settled,"" even if the full amount wasn't paid. 3) Late approvals or adjustments can impact how numbers appear in reports. 4) CSR doesn't reflect how much money was paid; it just shows how many claims were approved.

What Factors to Consider When Assessing the Claim Settlement Ratio?

While CSR is an essential metric of an insurer’s reliability, it shouldn’t be the only factor guiding your decision. To make a well-informed choice, consider these key factors alongside CSR:

1. Claim Rejection & Partial Settlement Rates: A high CSR can be misleading if many claims are partially paid or outright rejected. 
2. Consistency Over the Years: Look for insurers with a stable or improving CSR trend over the past 3–5 years. A one-time spike may not reflect long-term performance.
3. Claim Processing Time: Even with a high CSR, if claim approvals take weeks or months, the experience becomes frustrating. Timely claim settlement matters.
4. Policy Terms, Exclusions & Waiting Periods: CSR won’t help if your claim falls under policy exclusions or unmet waiting periods. Read the fine print carefully.
5. Network Hospitals & Cashless Access: A strong hospital network ensures smoother cashless treatments. Limited access can disrupt your care, even with a good CSR.
6. Insurer’s Reputation & Support: Check customer reviews, complaint data, and the company’s financial health. Responsive service and transparency go a long way during stressful times.

Bottom line, CSR is valuable but works best when viewed in the context of overall service quality and claim experience.

Did You Know? An insurer’s claim process depends a lot on its financial health. If it collects low premiums, runs at a loss, or has weak reserves, it may delay or reject more claims, especially when claim volumes rise. That’s why the cheapest plan isn’t always the best. In contrast, financially strong insurers providing comprehensive health plans are more likely to settle claims smoothly and fairly, without sudden premium hikes or unnecessary hassles.

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Ditto’s Take on Claim Settlement Ratio in Health Insurance

Claim Settlement Ratio gets a lot of attention, but it shouldn't be the only thing you look at. It lacks standardization across insurers, so IRDAI may need to bring more uniformity to its reporting and take a more holistic approach.

While CSR is important, it's just one piece of the puzzle. Here are other key factors, along with CSR, to consider before choosing a health insurer:

1. CSR: 90% or higher
2. ICR: 50%–80% (indicates balanced claim payouts)
3. Network Hospitals: 10,000+ (ensure your preferred ones are included)
4. Complaints Volume: Lower is better (under 20 per 10,000 claims is ideal)
5. Annual Business: ₹2,500 crores+ (indicates strong financial strength)

Even with strong numbers, claim settlement isn't guaranteed. But your chances improve significantly with honest disclosures, a decent insurer, and guidance from an experienced advisor.

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