Incurred Claim Ratio and Health Insurance
You must research an insurer’s Incurred Claim Ratio (ICR) is 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. Read on to discover health insurers with a high 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 is reflected in their Incurred Claim Ratio (ICR).
The Incurred Claim Ratio refers to the total net premiums paid by a health insurer to policyholders in relation to the net premiums collected by the insurer in a financial year.
For example, if a health insurance company has an ICR of 90%, it means the insurer pays ₹90 to its policyholders for every ₹100 of premium collected.
Check Incurred Claim Ratio of Health Insurers
Each year, the IRDAI (Insurance Regulatory and Development Authority of India) publishes Incurred Claim Ratio data. To check the Incurred Claim Ratio of health insurers in India, visit PolicyX's Data Labs section for detailed information.
Incurred Claim Settlement Ratio for General Insurers and Claim Settlement Ratio for Life Insurers
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 and Claim Settlement Ratios for Life Insurance.
| Company | Type | 2020 | 2021 | 2022 | 2023 |
|---|---|---|---|---|---|
| Acko General Insurance Ltd. | General Insurance | 93.49 | 93.65 | 97.2 | 83.88 |
| Bajaj Allianz General Insurance Co. Ltd. | General Insurance | 98.61 | 94.73 | 96.59 | 74.27 |
| Bharti AXA General Insurance Co. Ltd. | General Insurance | 92.17 | 92.81 | 0 | 0 |
| Cholamandalam MS General Insurance Co. Ltd. | General Insurance | 91.47 | 92.94 | 93.23 | 67.88 |
| Edelweiss General Insurance Co. Ltd. | General Insurance | 99.72 | 97.8 | 97.26 | 89.59 |
| Future Generali India Insurance C. Ltd. | General Insurance | 93.34 | 93.74 | 96.01 | 79.18 |
| Go Digit General Insurance Ltd. | General Insurance | 99.65 | 94.24 | 96.09 | 71.87 |
| HDFC ERGO General Insurance Co. Ltd. | General Insurance | 99.8 | 98.36 | 98.49 | 79.04 |
| ICICI Lombard General Insurance Co. Ltd. | General Insurance | 96.93 | 96.93 | 97.07 | 77.33 |
| IFFCO Tokio General Insurance Co. Ltd. | General Insurance | 81.67 | 82.57 | 89.38 | 111.18 |
| Kotak Mahindra General Insurance Co. Ltd. | General Insurance | 98.62 | 96.01 | 96.9 | 56.01 |
| Liberty General Insurance Ltd. | General Insurance | 97.84 | 95.57 | 97.3 | 74.17 |
| Magma HDI General Insurance Co. Ltd. | General Insurance | 95.4 | 93.63 | 92.34 | 72.1 |
| Navi General Insurance Ltd. | General Insurance | 98.7 | 99.99 | 99.99 | 59.28 |
| Raheja QBE General Insurance Co. Ltd. | General Insurance | 30.29 | 95.51 | 93.3 | 138.67 |
| Reliance General Insurance Co. Ltd. | General Insurance | 98.16 | 98.59 | 98.65 | 86.31 |
However, you should not rely solely on an insurer's Incurred Claim Ratio when making a health insurance purchase decision. Other important factors include:
- Coverage features
- Riders
- Available sum insured
based on which you must opt for the best health insurance plan.
How Is Incurred Claim Ratio Calculated?
The Incurred Claim Ratio formula is: Net Claims Settled / Net Premium Collected. Each year, the Incurred Claim Ratio is published in the annual report by IRDAI for all private, public, and standalone health insurers.
ICR = Net Claims Settled / Net Premium Collected
How Incurred Claim Ratio Differs from Claim Settlement Ratio (ICR vs CSR)
There are subtle differences between the Incurred Claim Ratio and the Claim Settlement Ratio of health insurers.
| Incurred Claim Ratio | Claim Settlement Ratio |
|---|---|
| Ratio of total claims paid to total premiums received by health insurers. | Ratio of total claims settled to total claims filed with the health insurer. |
| An ICR between 50% and 80% is considered ideal. | A higher Claim Settlement Ratio is generally better for the health insurer. |
| Time taken to settle claims is considered when calculating ICR. | Time taken to settle claims is not considered. |
| Reflects the financial stability of a health insurer and its claim settlement capability. | Showcases the claim settlement history of a health insurer over the years. |
What Does the Incurred Claim Ratio Reveal About Health Insurers?
The Incurred Claim 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 Claim Ratio is 100% or more
An Incurred Claim Ratio of 100% or more indicates that a health insurer has paid more in claims to policyholders than it received in premium payments in a financial year.
This is not a good indicator for an insurance company, suggesting that corrective steps are needed.
If Incurred Claim Ratio is 50% or lesser
This is positive for the insurer but potentially negative for policyholders, as it indicates the company collected significantly more premiums than it paid out in claims.
If the Incurred Claim Ratio is between 50% and 100%
This is considered an ideal situation for both policyholders and insurance providers. It indicates that premiums collected are being utilized appropriately to pay claims.
The Final Verdict
While factors like coverage features, sum insured, and customer service are crucial, the Incurred Claim Ratio is also a significant factor when purchasing a health insurance plan. Understanding how it's calculated and its impact on your coverage is essential.
To learn more about the Incurred Claim Ratio, visit India’s trusted insurance aggregator PolicyX.com or connect with our insurance experts.
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