How to use NL-47 disclosures to pick health insurance

Insurance companies publish hundreds of pages of data every year. While useful for investors, these disclosures are hard for ordinary customers to navigate. Before buying health cover, ask: what does the policy cover, how many claims does the insurer pay, do customers complain often, and do policyholders keep renewing? Schedule NL-47 of annual public disclosures provides product-level information to help answer these questions.

NL-47 gives the claim settlement ratio for individual products. Ideally, look for policies with rates above 90%. The incurred claims ratio (ICR) measures claims paid as a proportion of premiums collected. An ICR above 100% could lead to higher premiums, a very low ratio may mean expensive premiums or low payouts. For one standalone health insurer, product-level claim settlement rates ranged from 92% to 97%, and ICRs from 52% to 107%.

NL-47 also provides product-wise complaint data and renewal rates. Complaint rates can vary sharply among products of the same insurer. Renewal rates show the percentage of policies renewed. Age-wise data indicates how many policies have stayed active for one, three, five or more years. For one leading insurer, renewal rates across products ranged from about 87% to 95%. One widely sold product had nearly two lakh policies active for five to 10 years.