Shopping for health insurance can be done on several parameters: features, price, add-on riders or anecdotal information from near and dear. But one crucial factor is the claims settlement data. In the glare of abundant features, one should remember that one true test for health insurance is at the time of making claims, preferably in the cashless mode. The measurement of the metric, though, can be hard to find or even interpret. Here, we point policyholders to the source of claims data. We also present the financial dimension of claims but one that provides an insight to policyholder.
Sourcing from regulator
IRDAI, the insurance regulator, publishes the ‘Handbook on Indian Insurance Statistics’ annually. The publication is a dated one, as the one released in February this year details performance till FY23-24. The publication is cumbersome to navigate but should be the first source of data. The publication carries claims at the beginning of the period, claims made, paid, and repudiated in the period. It also carries aging of the claims paid (less than 3 months or more than five years). This data includes all the health insurers in India, and of several years.
Policyholders can infer two important metrics from the publication: percentage of claims paid and claims repudiated compared to claims made in the period. Claims are repudiated after the insurer has reviewed the claim and denied payment. This could be on account of exclusions, improper disclosure, or plain fraud.
While this data is available for all insurers, we draw attention to the broad grouping. Insurers are classified as public or state-owned insurers, private general insurers who offer motor, fire, travel and other insurance along with health and standalone health insurers or SAHI who offer only health insurance. The following data is for health insurance alone:
As shown in the table, for the period FY23-24, Public insurers have the highest percentage of claims paid at 96 per cent. This implies that 96 per cent of the health claims made in the fiscal year, were paid in the period. This is followed by SAHI grouping (89 per cent) and then by private group (85 per cent). While public sector performance is reassuring, the group also serves government sponsored customers which has a high payout ratio. The impact of customer segment within insurers is analysed further below. But when analysed on claims repudiated, it was found that SAHI segment has reportedly repudiated 10 per cent of the claims made in the year which is several times that of private (2 per cent) or public (3 per cent).
Policyholders should gain comfort from their insurer metrics in the report on claims; an above average claims paid and below average claims repudiated.
Insurer disclosures
Insurers do disclose a claim settlement ratio, but the methodology is not uniform, which makes comparison difficult for a fair view.
But insurers must report Form NL-37 every quarter amongst several quarterly public disclosures they are obligated to by the regulator. NL–37 captures health claims data for the quarter. Compared to broad disclosures with IRDAI, this disclosure, being quarterly, throws light on recent performance of the insurer. But, it is to be noted that quarterly data could be impacted by seasonality or maybe too short to capture their performance.
On the other hand, this disclosure includes cash component of the claims data as well, which is an important dimension to analyse claims. A claim could be honoured, but if only 60 per cent of the claim is honoured, the IRDAI data will not capture this shortfall.
The table summarises claims data for two leading private insurers, two SAHI and one public insurer. While HDFC Ergo has met 91 per cent of the claims (by number) in Q1FY26, it has only met 83 per cent of the cash claims in the quarter. Across the insurers, it can be observed that there is a 7-10 per cent ‘cash lag’ – with the exception of Star Health where the difference is narrowed to 3 per cent. This could be attributed to consumables used by healthcare providers, especially inflated post-Covid, but not reimbursed by insurers, unless a consumables rider is purchased.
Incurred loss ratio
The IRDAI handbook provides this measure as well for all the insurers for the past year. Simply put, this measures claims paid as a percentage of premiums earned. This is a financial metric which indicates profitability of operations or even underwriting skills of the insurer more than claims settlement.
But the policyholder can still draw some conclusions from the data. Public insurers deliver a strong 103 per cent incurred loss ratio. But in the Individual sub-segment, the ratio is still 88 per cent. The high overall incurred loss ratio is owing to a high group weight and presence of government sponsored schemes in the mix. As was often stated, government schemes followed by group policies have a better claims outcome for policyholders. This trend is evident in private and SAHI insurers as well. But the limiting factor is the magnitude of coverage in group policies and availability for all in government sponsored schemes.
Published on September 20, 2025