Stories
IRDAI Proposes New Claim Settlement Ratio Calculation for Enhanced Transparency
- •IRDAI proposes standardizing how insurers disclose product performance and quality, including claim settlement performance.
- •Currently, insurers use varying definitions and methods to report performance, leading to inconsistencies in claim settlement ratios.
- •The new proposal suggests calculating the claim settlement ratio based on the amount paid versus the amount received, rather than just the number of claims decided.
- •This change aims to provide policyholders with a more accurate picture of an insurer's efficiency and actual payouts.
- •The broader goal is to make product, pricing, and quality information easier to compare for consumers before purchasing a policy.
Key Questions Answered
Insurers currently publish health insurance claim settlement ratios by count, which represents the number of claims decided as a proportion of the number of claims received. However, these decided claims can include fully paid, partly paid, repudiated, or rejected claims.
IRDAI has proposed that claim settlement ratios based on the total monetary amount are more relevant to policyholders. This metric measures the total amount of claim payments as a proportion of the total amount of claims received.
IRDAI noted that current disclosures lack consistency, making information on claim settlement performance and grievance redressal difficult to compare and access. For instance, grievances are often incorrectly recorded as service requests rather than being included in quality disclosures.
