The healthcare business is the most famous, with millions of people worldwide investing dollars into it every year. People pay annual premiums towards different Health Policies religiously, hoping that they can rely on the General Insurance companies for assistance if they require medical attention. Even if you get diagnosed with severe medical conditions, you can heave a sigh of relief if you hold Health Insurance.
It assures you need not worry about expenses related to treatments. But before that, understand how the claim settlement ratios work.
What is it?
Just like it is essential to invest in Health Insurance Plans that offer comprehensive treatment, it is crucial to be aware of different claim ratio types associated with the policies. There are three claim settlement ratios related to a Health Policy:
Claim settlement ratio
The top priority of any Insurance buyer is the providers’ reputation when settling claims. You can judge the insurer based on the claim settlement ratios. The insurer essentially can settle the claims made against the Insurance instantly. Moreover, the settlement ratio provides information about the percentage of claims settled by the company within a year and the average time taken to settle the claim.
So, if your research shows that the Insurance company provides a claim settlement ratio of 80%, it means that 80 out of 100 claims get honoured. You calculate the ratio using the following equation:
(Total Claims Settled) / (Total Reported Claims + Outstanding Claims at the beginning of the Year – Outstanding Claims at the end of Year)
Claim repudiation ratio
If you make a claim that meets Medical Insurance terms and conditions, it gets rejected. For example, most policies do not cover recreational cosmetic surgeries like Botox, nose-jobs, and plastic surgeries. The claim repudiation ratio essentially includes claims rejected by insurers in a financial year. So, if your study shows that an Insurance provider has a claim repudiation of 18%, it means that 18 out of 100 claims were rejected.
One of the common reasons for insurers to reject claims is false information. Also, when you want to make a claim, inform your Insurance company beforehand so that your claim does not get rejected. Your claim may get rejected if you show expenses uncovered under the plan. The equation for calculating the claim repudiation is:
Claims repudiation ratio = (Claims rejected/total claims) %
Claim pending ratios
The Health Insurance Policy providers take a few hours to honour your claims. They need to check the documents provided, like bills or medical reports, before the amount gets reimbursed. The outstanding claims to get settled fall under the claim pending ratios. If your claim is pending, it means the insurer has neither accepted nor rejected the claim. So, if the research shows a claim pending ratio of 27%, it suggests that 27 out of 100 claims are pending assessment.
Such claims get settled after investigating gets done by the insurer. The calculation for claim pending rations happens using the following formula:
Claims pending ratio= (Claims outstanding/total claims) %
