Most health insurance companies in India publish claim settlement ratios that look reassuring at first glance. Figures above 90% suggest that claims are handled smoothly and that policyholders have little to worry about. But the picture changes once you understand how these claims are counted.

A claim can be recorded as settled even when the payout is small or the process is long and frustrating. That gap between the number and the experience raises a simple question: do claim settlement ratios reflect the real story, or only the part that looks good? 

The claim settlement ratio shows the percentage of claims an insurer marks as settled in a given year. If a company receives 10,000 claims and pays any amount for 9,500, the ratio becomes 95%.

The metric is easy to understand, which is why customers rely on it so heavily. But this simplicity hides the details that matter. It does not show how much of the claim was actually paid, how long it remained pending, how many documents were demanded, or how many deductions were made.

Shilpa Arora, co-founder and COO of Insurance Samadhan, said, “The claim settlement ratio reflects how many claims were processed, not how fairly or fully they were paid. Even if a claim is partially settled—say with heavy deductions—it still counts as ‘settled.’”

She said many complaints they receive stem from the parts of the process that the ratio does not capture. “Most grievances come from deductions, delays, and repeated document demands. Many claims are stuck for weeks because insurers keep raising queries or asking for the same documents multiple times—yet such pending cases are not included in the published settlement ratio data.”

This disconnect exists because of how insurers classify a settlement. “Insurers classify a claim as ‘settled’ once any payment is made—even if it’s only a partial amount or released after a long delay,” she said.

Arora added that the highest rejections occur at the cashless stage, primarily linked to pre-existing conditions and policy exclusions, while post-hospitalisation reimbursements are usually paid with deductions. These complexities shape the final outcome, but the settlement ratio smooths them out entirely.