Claim Settlement Ratio: How It Works

Claim settlement ratio (CSR) is an important key indicator in the insurance industry to measure the efficiency of an insurance company in making payments on claims.CSR can be defined as a simple percentage of claims that an insurance company pays as a proportion of the total claims received.It is a test of reliability and trustworthiness: when you pay premiums, you expect your insurer to pay valid claims - and CSR gives you an insight into how frequently they do so.

What Is the Claim Settlement Ratio in Insurance?

In health insurance specifically, CSR often refers to the number of hospitalisation or treatment-related claims settled over a fiscal period, usually compared against the number of claims filed (or claims filed plus any pending claims). This is reported to the regulatory bodies by insurers, and this information is usually published by the Insurance Regulatory and Development Authority of India (IRDAI), which assists the insurance policyholder to make more informed choices.

Why Is Claim Settlement Ratio Important?

1. Trust and Credibility-High CSR implies that the insurer keeps its promises.To policyholders, especially those who purchase health insurance, it is an assurance that the company is reliable and it is likely to compensate them when they need it.
2. Financial Security-When you cover the health insurance premiums, you are insuring against medical emergencies.It is also reassuring to know that your insurer has a good CSR because you would not worry that your claim would be declined or delayed unnecessarily.
3. Comparison of Insurers - CSR is one of the important parameters that are used to compare various insurers.Although it is not the sole determinant, it is a good indicator of the previous performance of paying claims.
4. Risk Assessment - A low CSR on an ongoing basis can be an indicator of aggressive underwriting, increased rejections or bad service.Conversely, the very high CSR would suggest that the insurer would be underpricing risk.
5. Regulatory Insight - As regulatory authorities such as the IRDAI are making the data on CSR public, you, as a policy purchaser, can use this openness to select healthier, stronger insurers.

How Is Claim Settlement Ratio Calculated?

Even though various reports and organisations might have slight differences, one common method to calculate CSR is:

CSR=Number of Claims Received (or Reported)Number of Claims Settled×100

In some cases, the formula is:

CSR=Claims reported + Opening pending claims – Closing pending claimsClaims settled during the period×100

This is a more detailed version that takes into consideration outstanding claims of the last period, providing a more precise image of the settlement activity.

To illustrate, assuming that an insurer received 10000 claims during a financial year, paid 9000 claims, and transferred 200 claims to the following year, then the CSR would be:

9,000/10,000×100=90%

What Is a Good Claim Settlement Ratio?

There’s no one-size-fits-all “good” CSR, but there are some benchmarks and guidelines:

• Above 85%: It is often regarded as healthy in health insurance, particularly when settlement is timely.
• 95%+: Excellent, represents very high claim payout consistency.
• Below 85%: That might be a red flag - might signify more rejections, delays or underwriter risk appetite.

That said, CSR should not be the only factor. Other factors matter:

• Amount Paid vs Number of Claims: A high CSR by number doesn’t always mean high claim amount payout.
• Settlement Timelines: How quickly are claims settled? Within 3 months? 1 month?
• Repudiation Reasons: What kinds of claims are being denied?

Therefore, even though CSR is extremely significant, you must always consider it in relation to other measurements.

Factors That Affect an Insurance Company’s Claim Settlement Ratio

Several factors influence an insurer’s CSR:

1. Underwriting Standards
   Strict underwriters (medical checks, exclusions) of insurers can deny a greater number of claims, reducing CSR.
2. Fraud & Misreporting
   Rejections can be caused by fraudulent claims or misreported claims, which are detrimental to CSR.
3. Product Design
   Plans that have sub-limits, waiting periods, co-pays, and room rent limits frequently have claims turned down or reduced.
4. Claim Processing Efficiency
   The TPA (Third-Party Administrator) and insurer's speed and efficiency to evaluate the claims affect the number of claims settled.
5. Policyholder Behavior
   The accuracy with which policyholders provide information on past medical history, claim declarations, and claim procedures is important.
6. Regulatory Environment
   Regulatory examination (such as IRDAI reporting) affects the aggressiveness with which insurers handle claims, as compared to growth.
7. Reserves & Financial Strength
   Better reserves or solvency enable the insurers to make high or big claims, and this can contribute to a healthier CSR.
8. Pending Claims
   A high number of pending claims carried over lowers the effective settlement ratio if not managed well.

Claim Settlement Ratio of ManipalCigna Health Insurance

When it comes to ManipalCigna Health Insurance, the CSR has shown interesting trends depending on the source and context:

• According to their own statement for FY 2022–23, ManipalCigna reported a CSR of 88.32%.
• According to its prospectus, ManipalCigna commits to settling non-cashless (reimbursement) claims within 15 days of receiving necessary claim documents.
• In case of delay, they promise a penal interest of 2% above the bank rate from the date of document submission to payment.

So how do we reconcile these numbers?

• The 88.32%  figure likely refers to a specific measure (maybe all claims, or an older methodology) based on the press release.
  
  
• The variation underscores that not all CSR metrics are the same, and you should check what exactly is being measured (number of claims, time-bound settlement, pending claims) when comparing.

How to Check the Claim Settlement Ratio of Insurance Companies

If you want to check the CSR of any insurer (including ManipalCigna), here are practical steps to do so:

• IRDAI Reports

• Visit the IRDAI website → Annual Report / Statistical Handbook → check health insurance CSR metrics.
• IRDAI often provides “Claims Paid within 3 months” and other breakdowns.

• Insurer’s Annual Report / Prospectus

• Many insurers publish CSR and claim-handling policies in their annual reports or on their websites.
• Example: ManipalCigna’s prospectus outlines claim settlement timelines and a penal interest clause.

• Third-Party Aggregators / Comparison Portals

• Other platforms often list CSR and other claim-related metrics for insurers.
• These portals may also highlight “claims settled within 3 months,” “pending claims,” and more.

• Insurance Broker / Agent

• Ask your broker for the insurer’s CSR data. Good brokers will refer you to the latest IRDAI or company-published figures.

• Regulator-Backed Publications

• Bodies like IBAI (Insurance Brokers Association of India) publish insights and data on claims and settlement ratios.
• News, media portals (like Economic Times) often report on CSR from IRDAI’s release.

How Claim Settlement Ratio Helps You Choose the Right Insurer

1. Risk Assessment:  A stable or high CSR over multiple years signals good risk management and reliable claim payouts.
2. Cash Flow Assurance: If you might need frequent hospitalisation or are buying a high sum-insured policy, choosing an insurer with a good CSR gives confidence that claims will not be rejected without cause.
3. Speed & Efficiency Consideration: Look for insurers with high “within-3-month” settlement rates - this means your claim is likely to be handled promptly.
4. Transparency & Trust: Insurers that openly report CSR, penalties for delay, and the logic of the claim process are often more transparent and customer-focused.
5. Long-Term Relationship: For long-term policies (family floater, top-ups, high-SI), a strong CSR helps you build a more secure insurer relationship.

Tips to Ensure a Smooth Claim Settlement Process

Having a high CSR is great, but you also need to play your part to make the claim process smoother. Here are some actionable tips:

1. Choose Network Hospitals: Use cashless network hospitals wherever possible. ManipalCigna, for instance, has many network hospitals.
2. Understand Your Policy: Read your policy documents thoroughly: waiting periods, sub-limits, co-pay, room rent, exclusions.
3. Intimate Claims Early
• For planned hospitalisation: inform the insurer well before (as required by the policy).
• For emergencies: notify immediately (many insurers require 24-hour intimation). For example, ManipalCigna’s FAQs say to call a toll-free number in emergencies.
4. Maintain Proper Documentation
• Keep medical reports, discharge summaries, bills, prescriptions, and investigations well organised.
• Submit all required documents properly; otherwise, your claim may be delayed or rejected.
5. Follow Up: Use the insurer’s claim portal or tracker. Many companies have online status-tracking or apps.
6. Escalate If Needed: If there’s a delay, check if your policy mentions interest for delayed payments. (Like ManipalCigna: 2% above the bank rate in its policy). Escalate through customer care or through a broker if needed.
7. Maintain Honesty & Accuracy: Disclose any pre-existing conditions accurately. Misdeclarations often lead to claim denials.
8. Use Telemedicine / Preventive Care: For some illnesses, use teleconsultation or wellness programs to reduce hospitalisation risk, which indirectly helps your claim experience.

Conclusion

The claim settlement ratio is one of the most important metrics to evaluate when choosing a health insurance provider. It reflects how often and how reliably an insurer pays out claims. However, it's essential to look at what kind of CSR is being reported - the number of claims, settlement time (e.g., within 3 months), and whether pending claims are included in the calculation.

In the case of ManipalCigna Health Insurance, the numbers vary slightly depending on the source: press statements report a CSR of 88.32%, while comparison portals (PolicyX) and other platforms (Turtlemint) suggest ~99% settlement, especially for claims settled within a certain timeframe. The company also clearly outlines its claim processing rules - including a 15-day settlement window for non-cashless claims and penal interest for delay.

While ManipalCigna's CSR is respectable among stand-alone health insurers, it's wise for buyers to compare it with peers, assess policy terms, and consider factors like speed, amount paid, and claim process efficiency before making a decision.

Explore ManipalCigna’s plans, get a quote, and compare their Sarvah offerings or other health plans to see which one suits your needs best.

FAQs on Claim Settlement Ratio

1. What is the claim settlement ratio in insurance?

The claim settlement ratio shows the percentage of claims an insurer pays out compared to the total number of claims submitted. It’s a key measure of the insurer’s reliability in honouring claims.

2. Which company has the highest claim settlement ratio?

As per recent IRDAI data, Acko General Insurance had one of the highest claim settlement ratios (99.91%) for health/general insurers within 3 months.

3. What is considered a good claim settlement ratio?

Generally, a CSR above 90% is considered strong. 95% and above is excellent. But you should also look at settlement timeframes, amounts paid, and any pending claims.

4. How can I check ManipalCigna’s claim settlement ratio?

1. Check IRDAI’s Statistical Handbook or annual reports for CSR data.
2. Look at ManipalCigna’s annual report or prospectus - these often include claim-settlement policies and performance.

5. Does a higher claim settlement ratio mean a better insurer?

Not necessarily. A high CSR is a positive signal, but it doesn't tell the full story. You should also examine:

• Time taken to settle claims (e.g., “within 3 months”),
• The average claim amount paid,
• Rejected or partially paid claims,
• Policy structure (waiting periods, sub-limits, co-pay).

CSR is a very useful indicator - but combine it with other factors to choose the right insurer.