Star Health and Manipal among worst insurers in terms of claims settlement; General SBI leads the pack

Many clients look at claims settlement rates or rely on anecdotal claims stories from acquaintances. However, the claims settlement rate alone does not give the complete picture. Other data, notably the ratio of claims paid in terms of amount, holds the key.

“Claims settlement ratios taken in isolation can present a skewed narrative. For example, if an insurer processes 80 small claims for ₹100 but leaves 20 larger claims of ₹1 lakh unresolved, they could still boast of a claims settlement rate of 80 per cent,” said Sumit Bohra, president of the Insurance Brokers’ Association of India (IBAI). “This measure does not does not take into account the proportion of claims paid in terms of total amount, which could be significantly lower.

Number vs. amount of claims

What does a claims settlement ratio tell you about an insurer? It shows how many claims per year an insurer has settled or paid. If an insurer has a claims settlement rate of 95%, this means that it has paid 95% of the claims it received during a financial year. However, the devil is in the details. What happens if an insurer only partially pays the claim? This would still be considered a settled claim. That said, the amount of claims paid by an insurer is greater. The higher the paid claims ratio, the better an insurance company is in terms of measured ratio.

However, this data is not readily available. While insurers highlight their claims settlement ratios, they barely mention reimbursement ratios based on claims amount. Although insurers report the total amount of claims paid in a year in public information, the ratio must be calculated manually for each insurer in order to make a comparison. Doing this for 34 insurers is not feasible for one client.

The IBAI recently published a manual for policyholders, General Insurance Claim Insights, compiling metrics such as claims settlement rate (amount), claims repudiation rate, claims handling rate and resolution rate grievances, among others.

The manual includes all data points at an aggregate level as well as individual business sectors, such as fire, health, ocean freight, maritime hull, engine damage, engine damage by third parties and miscellaneous.

When it comes to health data, SBI General Insurance leads with a claims paid (to amount) ratio of 88.3%. Its ratio of paid claims (to number of claims) remained almost the same at 88.86%.

Next comes Bajaj Allianz, which cites a ratio of 86.23% in amount and 90.29% in number of claims. This is followed by Royal Sundaram (83.18%), IFFCO Tokio (80.44%), Digit Insurance (79.5%) and Liberty General (79.14%) in terms of claims amount.

Star Health had the lowest ratio, at 54.61%. This means the company has only settled about half of the claims received in a financial year. The other four poor performers were Manipal Cigna (56.14%), Universal Sompo (55.25%), Navi General (61.69%) and Edelweiss (62.34%).

Among the notable insurers, ICICI Lombard maintains a ratio of 82.59% in number of claims. This only represents 63.98% in terms of amount. HDFC Ergo has it at 86.90% and 71.35% respectively.

State-owned insurers have performed better on this front, with four of them, New India, Oriental Insurance, National Insurance and United India, citing a claims paid (to amount) ratio of 98.74%, 97.35%. , 87.95% and 73.03%, respectively. . The ratio of paid claims to the number of claims stood at 95.04%, 87.97%, 84.61% and 84.28% respectively.

Data is available for the 2022-23 financial year. Total claims available for processing in FY23 included total claims outstanding at the beginning of the quarter ended June 30, 2022 as well as total claims reported during the fiscal year ended March 31, 2023. total amount of claims paid in FY23 was divided with this to reach the total amount of claims paid in FY23. paid claims ratio for the year 23.

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More data for better transparency

Insurers publish a lot of data, as the Insurance Regulatory and Development Authority (Irdai) points out, but only seasoned experts can learn from it. They believe more data points are needed for better transparency and benchmarking.

“The data is not granular, to say the least. The regulator should pave the way for better reporting requirements. For example, insurers do not categorize the reasons why a certain amount or number of claims were rejected. This may be a fraudulent claim or one that does not comply with the agreed terms. We have no way of knowing,” Bohra said.

“Specific reasons for rejecting or repudiating claims can help policyholders learn more about insurers. For example, if an insurer detects a high number of frauds, this can give assurance to policyholders that the insurer is effective “Similarly, policy conditions. Specific refusals may reveal poor underwriting practices,” he added.

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Kapil Mehta, co-founder and CEO of SecureNow, said he noticed discrepancies in a few insurers’ data during his calculations. For example, the closing claims of one quarter are not the same as the opening claims of the next quarter.

He said insurers must report data for group and retail businesses separately. “The regulator should consider requiring disclosure of data at group portfolio and retail level, as the claims handling process in both cases is very different from each other. In detail, data disclosure is necessary at the product level so that policyholders can make better product selection. Broader data at the company level does not help much,” Mehta said.

Additionally, some definitions may be more precise. “In terms of claims, each insurer has its own way of counting them. For example, claims may be sent by mail, logged by telephone or via social media. Some insurers capture all claims, while others just to send them by email A standard way of doing this is necessary Likewise, if a customer makes a request, insurers must classify whether it is a question, a service request or a. grievance,” he said.

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Take mint: Insurance data is publicly available and Irdai also publishes it every year. However, most of it is available at the industry level and in absolute numbers. Key data, including amount paid claims ratio, product specific claims ratios, claims efficiency ratio, pending claims ratio and pending claims ratio, should be easily accessible on insurance company websites and in the annual report of the insurance regulator so that policyholders can make a comparative and informed decision.