These Insurers Have Highest 'Claims Paid Ratio': Know Why It Matters

When it comes to purchasing health or general insurance, there’s one metric that most individuals might overlook, ‘Claims Paid Ratio’. Also referred to as the ‘claim settlement ratio’, this is an indicator of how reliable an insurance company is when it comes to ‘fulfilling claims’.

In simpler terms, it tells you how the percentage of claims settled out of the total claims received by an insurer.

Says Narendra Bharindwal, Vice President at the Insurance Brokers Association of India (IBAI), “While it’s an important indicator, understanding its nuances is crucial. For instance, an 80 per cent Claims Paid Ratio means that 80 per cent of claims were settled, while 20 per cent were either rejected or closed without payment.”

There are many reasons that lead to an insurance claim getting rejected. Adds Bharindwal, “Often, rejections result from valid reasons such as fraudulent claims, misrepresentation, exclusions under the policy, or incomplete documentation, not from negligence.”

Smaller claims are often resolved more quickly, while higher-value claims can take longer due to their complexity and the need for detailed assessments. “Therefore, while the Claims Paid Ratio offers insight into an insurer’s claims management practices, it becomes most meaningful when accompanied by transparency on rejection reasons, timelines for settlement, and the monetary value of claims paid,” Bharindwal states.

Companies With High Claims Paid Ratio

The IBAI recently released its report on ‘Claims Insights’ for the fiscal year ending March 2023. The report presents data on the claims paid ratio of various general and health insurers, the top performers are as follows;

Aditya Birla Health Insurance has recorded the highest Claims Paid Ratio of 94.47 per cent in 2023, up from 92.26 per cent in 2022. Following closely behind it, is HDFC ERGO, which recorded 94.32 per cent claims paid ratio in 2023, up against 92.10 per cent a year before that.

The only other private insurer to breach the 90 mark is Universal Sompo which has recorded a 91.88 per cent claims paid ratio in 2024 against 89.96 per cent in 2022.

Public insurer New India Insurance has ranked third highest at 93.13 per cent in 2024 rising above its near-similar record of 93.04 per cent in 2022.

However, some insurers showed a low claims-paid ratio in 2023 when compared to the same metric in 2022.

Oriental Insurance, for instance, had an 82.27 per cent claims paid ratio in 2022 which winded down to 78.87 per cent in 2023. Similarly, Tata AIG recorded 81.95 per cent in 2023 compared to 93.45 per cent in 2022 - which is a downside of 11.5 per cent within a year.

Bajaj Allianz showed 73.38 per cent claims paid ratio in 2023 against 86.89 per cent in 2022. Star Health too saw a slight drop with 74.90 per cent of claims paid in 2023 against 77.54 per cent in 2022.

Here’s Why It Matters For You

As a policyholder or person looking to buy an insurance policy, it is important for you to consider and check the claims paid ratio or CSR of the insurer. This ratio is more than just a statistic, it is also a measure of confidence that your insurer will stand by you during difficult times.

While a high claims-paid ratio is important, it’s not the only factor to consider when selecting an insurer. Customers should also review:

Claim Settlement Time: How quickly claims are processed and paid. Understanding the insurer’s average settlement time can help manage expectations, particularly for claims that may require detailed assessments.

Coverage Benefits: Before purchasing a plan you should understand the breadth of coverage under the policy.

Policy Exclusions: What’s not covered under the policy can be as important as what is.

Customer Reviews: Also, it’s always a good practice to get real-world feedback that can provide insights beyond the numbers.

According to Bharindwal here are some key considerations that you should keep in mind;

Consistency Over Time: A stable claims-paid ratio over the years often reflects an insurer’s reliability. Look for trends rather than isolated data points to gauge the insurer’s track record.

Treatment of High-Value: While smaller claims might be settled quickly, larger or complex claims often require extended scrutiny. Policyholders should inquire whether high-value claims are treated with fairness and transparency.

Reasons for Rejection: Claims are often denied without due communication behind the reasons for rejection. Transparency is the key, therefore you should make sure that the insurer is providing you with a clear explanation that aligns with the terms outlined in the policy document.

Selecting the right insurance company is more than just choosing a policy with low premiums. As Bharindwal puts it, “For policyholders, the Claims Paid Ratio is more than just a statistic, it is a measure of confidence that their insurer will stand by them during difficult times.”