Incurred Claims Ratio And Health Insurance

‘You must research an insurer’s incurred claim ratio (ICR) ’ is a common advice you hear when purchasing health insurance. But why is it so important? What does it indicate, and how does it differ from the claim settlement ratio? We answer all these questions for you in this article. Stick around to find health insurers with the highest incurred claim ratio.

What Is Incurred Claim Ratio ( ICR)?

Every year, many Indians purchase health insurance plans. While some policyholders make one or more claims in a policy year, others may not make a single claim. The ability to settle claims makes a health insurer credible and decides their incurred claims ratio (ICR).

In simple words

‘Incurred claims ratio refers to the total net premiums paid by your health insurer to the policyholders in ratio to the net premiums collected by the health insurers in a financial year.’

To further simplify the concept, let’s say a health insurance company has an ICR of 90%, this means that the insurer pays 90 rupees to its policyholders for every 100 rupees of premium collected.

Check Incurred Claim Ratio Of Health Insurers

Each year the Incurred Claims Ratio data is published by IRDAI (Insurance Regulatory and Development Authority Of India). To check the Incurred claims ratio of health insurers in India simply visit PolicyX and check out the ‘Data Labs’ section to find out details about your health insurer.

General (Incurred Claim Settlement Ratio) and Life Insurers (Claim Settlement Ratio)

Note: Due to the nature of the data provided by IRDAI for 2022-2023, the following table displays Incurred Claim Settlement Ratios for General Insurance & Claim Settlement Ratios for Life Insurance.

However, you must not rely solely on the incurred claim ratio of a health insurer to make a health insurance purchase decision. There are multiple other factors such as:

• Coverage features
• Riders
• Available sum insured

based on which you must opt for the best health insurance plan.

How Is Incurred Claim Settlement Ratio Calculated  ?

The incurred claim ratio formula is denoted by ‘Net Claims Settled divided by Net Premium Collected’. Each year the incurred claims ratio is mentioned in the annual report published by IRDAI for all private, public, and stand-alone health insurers.

                                             ICR = Net Claims Settled/ Net Premium Collected

How Is Incurred Claims Ratio Different From Claim Settlement Ratio ( ICR vs CSR)

There are subtle differences between the incurred claims ratio and the claim settlement ratio of health insurers.

What Does the Incurred Claims Ratio Reveal About Health Insurers?

The incurred claims ratio is an indicator of the financial capacity of a health insurer. Read more to understand various ICR levels and what they indicate:

If Incurred Claims Ratio is 100% or more
A incurred claims ratio showcases that a health insurer has paid more in claims to the insurance holders than they have received in premium payments in a financial year.

This is not a good indicator for a health insurance company, corrective steps must be taken to change these conditions.

If Incurred Claims Ratio is 50% or lesser
This is a positive point for the insurance provider but a negative for the insurance holder. This indicates that the insurance company has collected more premiums than paying claims to insurance holders.

If the Incurred Claims Ratio is between 50 and 100%
This is considered an ideal situation for both policyholders and insurance providers. This indicates that the premiums collected by the insurance providers are being utilized correctly to pay claims to the policyholders.

It also showcases the availability of affordable health insurance plans by the insurance company.

The Final Verdict

Undoubtedly, it is important to consider factors like coverage features, sum insured, customer service, etc. Similarly, Incurred Claims Ratio is one of the many deciding factors in purchasing a health insurance plan. You must be aware of how it is calculated, how it can impact your health insurance coverage, and more.

To find out more about the incurred claims ratio, visit India’s trusted insurance aggregator PolicyX.com or connect with our insurance experts.

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