Why health insurance claims get rejected and what CSR really means: Top insurers ranked by claim settlement ratio

Do you have health insurance? A constructive answer to this question can save you lakhs later in life. This is because health insurance is often seen as a financial safety net. Still, for most policyholders in India, the real test arises at the time of claim settlement.

This is because medical costs nationwide are rising sharply, and a rejected claim can put significant strain on household finances. This makes understanding the fundamentals of health insurance and how they work, along with common pitfalls, indispensable to help an individual make better health-related investment decisions.

What is a health insurance plan?

A health insurance plan is essentially a contractual agreement in which an insurer promises to cover your medical expenses, such as hospitalisation, treatment and sometimes daycare procedures in return for a regularly paid premium.

Still, do remember that approvals in such cases depend heavily on policy terms, conditions, and transparency, along with other factors that are explained at the time of purchase. Keeping this in mind, let us look at the major reasons for the rejection of health insurance claims that you must pay attention to and be careful of in future to avoid rejection of your health insurance claim forms.

5 common reasons why health insurance claims get rejected

1. Non-disclosure of pre-existing diseases: It is vital for you to honestly declare illnesses such as diabetes, hypertension, and high blood pressure while you are filling out your health insurance form. If you do not declare such facts, your policy claim can be rejected later, as insurers consider such protection of information as a breach of trust.
2. Waiting period not completed: Most policies include waiting periods that must be completed before coverage begins. That is why any claims made during this period are usually denied.
3. Treatments not covered under the policy: Common expenses, such as dental care, cosmetic surgery, and therapies, may not be covered. Do check your policy for any specific procedures and see whether they are included, or add them through a rider; only then can they be covered.
4. Policy lapse due to missed premiums: In case you fail to meet premium payments, skip dates or avoid paying, then the policy becomes inactive, thus making any claim invalid.
5. Incorrect documentation or treatment at non-networked hospitals: Make sure you avoid sharing incorrect information in your claim form, and don’t ignore submitting hospital and medicine bills in their original form to establish your claims. Further, don’t go for treatment in hospitals that are not approved by your insurer to avoid claim rejection later on.

A lack of awareness or ignorance of these factors is among the biggest reasons for claim disputes and rejections in India. Hence, before you proceed with any particular health insurance, have a clear understanding of these conceptual fundamentals.

Secondly, you must have a clear understanding of another vital concept, the Claim Settlement Ratio (CSR), and its role in determining how worthy your health insurance provider is. Let us understand this concept in greater depth.

What is Claim Settlement Ratio?

The Claim Settlement Ratio (CSR) is the percentage of claims an insurance company successfully settles out of the total it receives in a financial year. For example, if an insurance company received 100 claims but settled only 82, its CSR will be 82%.

Similarly, if an insurance company receives 100 claims and settles 99, its CSR will rise to 99%. Now, a higher claim settlement ratio is a positive indicator, and it is prudent to look at the 3 to 5-year average value to take a better call.

Given this concept, here are prominent health insurance companies to consider for a new health insurance plan, ranked by their average claim settlement ratio.

Top 7 health insurance companies by claim settlement ratio

Note: Data sourced from Ditto

Therefore, choosing the right health insurance is not just about premiums; it requires a clear understanding of fundamental concepts such as coverage, exclusions, the claim process, settlement ratios, reasons a claim can be rejected, and long-term suitability.

How to choose the right health insurance plan?

Given the above factors, you can follow the points discussed below to carefully secure a reasonable health insurance plan for yourself:

1. Understand the coverage scope, monthly premiums, daycare procedures, hospitalisation, pre- and post-hospitalisation expenses, along with associated factors.
2. Compare the claim settlement ratios (CSRs) of different insurers and speak with experts to understand their reliability in settling claims.
3. It is important to pay attention to waiting periods and exclusions, especially for pre-existing diseases and specific treatments.
4. Make sure the policy has a wider, more extensive hospital network that provides cashless services to policyholders.
5. Evaluate if the sum insured you are aiming for is adequate. This depends on the individual, and it's best to discuss with a certified financial advisor for proper guidance.
6. Factors such as room rent limits, co-payment clauses, and sub-limits must be clearly acknowledged, as they can affect out-of-pocket expenses during treatment.
7. Aim for premium affordability over the long term, balancing cost with comprehensive coverage. Health, after all, is wealth.

The decision to purchase or switch a health insurance policy should always be made after careful consideration of all the facts and figures, and after discussing it with a certified financial advisor to ensure it aligns with your specific needs and requirements.

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