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Incurred Claim Ratio - How to Choose a Good Health Plan

By Finserv MARKETS - Aug 29,2019
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What is Incurred Claim Ratio

Though health insurance penetration is increasing, it is yet to take off fully in India. National Sample Survey Office (2016) data revealed that over 80% of the Indian population is not covered under any health scheme. Private insurance companies are still only able to reach a minuscule portion of the population. According to the National Health Profile data released in 2018, out of 4,37,457 persons covered under insurance, only 21% were covered by private companies.

However, the best insurance companies in India have not lagged in bringing new products with various new features offering attractive health insurance benefits to entice customers. The market is flooded with a range of products that fits every size, budget, and need.

There are close to 29 insurance companies that provide some form of health insurance products. Therefore, there must be some sort of benchmark or parameter to evaluate how a company is performing before potential customers apply for a policy online.

An easy way to evaluate a health insurance policy is by comparing it with other health plans online. Many websites offer free comparison tools based on specific parameters.

Most people tend to rely on subjective parameters when comparing health insurance plans online. We strongly believe that you should consider objective parameters such as premium payable, coverage offered, the incurred claim ratio, claim settlement ratio, exclusions, etc.

In this article, we will be discussing the incurred claim ratio (ICR) and how it is different from the claim settlement ratio (CSR). If you are searching for the best medical insurance companies in India, you can start by researching the insurer’s incurred claim ratio.

What is a Claim?

To understand the ICR and CSR, it is essential to know what a claim is. A claim is a formal application sent by you (the policyholder) to your insurer to receive the sum assured/insured amount that is agreed upon in the health insurance policy.

What is Incurred Claim Ratio?

The incurred claim ratio (ICR) is nothing but the insurer’s ability to pay the claims received during a financial year. The Insurance Regulatory and Development Authority of India (IRDAI) issues the details regarding the ICR of various insurance companies every year.

In simple words, ICR helps people measure the insurance provider’s performance. When looking to purchase a health insurance plan, you should consider choosing an insurer with a good ICR.

Incurred Claims Ratio is calculated as –

Incurred Claim Ratio (ICR) = Net Claim Incurred / Net Premium Collected

To understand the ICR better, consider the following example.

Illustration: Imagine the insurer you are planning to buy health insurance from has an ICR of 90%. Therefore, for every INR 100 earned by the company from the premiums paid by you (the policyholders), INR 90 is spent on settling claims by the company. This means the company earns a profit of INR 10. In case the ICR is 100%, or beyond that, it indicates that the insurer is suffering a loss in the business.

How the ICR Helps You Choose the Right Health Insurance Plan?

Here’s how the incurred claim ratio helps you choose the right health insurance –

  1. ICR greater than 100%

When the Incurred Claims Ratio is greater than 100%, it means that the insurer has higher insurance claim settlements than the total premium received by them in the financial year. In business terms, it means that the company is facing loss, and can be rejecting claims soon. Therefore, it is wise not to seek health insurance from an insurer with ICR greater than 100%.

  1. ICR between 50% and 100%

When the Incurred Claims Ratio is between 50% and 100%, it means that the insurer can manage the insurance claim settlements through the total premiums received in the year. In other words, the insurer is financially stable and sound of settling your claims and selling adequate health insurance.

Choosing an insurer with ICR between 50% and 100% has a good chance to settle your claim and thus is a wiser choice to seek health insurance from.

  1. ICR less than 50%

With ICR less than 50%, the insurer is settling claims between 0-50% out of the total premiums received in a single year. Here, the company will be making profits, but it is not a good situation for you (the policy buyer). In simple words, the company will be rejecting a majority of claims.

Hence, it is advisable not to buy health insurance from companies with an Incurred Claims Ratio less than 50%, as there are chances it pays out low compensation.

Incurred Claim Ratio of Different Companies as Per Latest IRDAI Report

Insurance Company Net Earned Premium

(INR in Cr)

Claim Incurred Net

(INR in Cr)

Incurred Claim Ratio

(ICR 2018-19) in %

Bajaj Allianz 1865 1591 85.31%
Bharti Axa 222 197 88.74%
Cholamandalam 428 151 35.28%
Future Generali 238 174 73.11%
HDFC Ergo 1053 656 62.30%
ICICI Lombard 1826 1397 76.51%
IFFCO Tokio 838 854 101.91%
Kotak Mahindra 37.7 17.8 47.21%
Liberty General 151 123.3 81.66%
Magma 54.8 49.57 90.46%
Raheja QBE 0.13 0.04 30.77%
Reliance 893 836 93.62%
Royal Sundaram 306.5 185.5 60.52%
SBI 978.67 509 52.01%
Shriram 3.57 1.87 52.38%
TATA AIG 665 518.53 77.97%
Universal Sompo 133.4 122.99 92.20%

Difference Between Incurred Claim Ratio and Claim Settlement Ratio

The claim settlement ratio (CSR) is nothing but the number of claims that have been settled by the insurer in a single financial year. However, it does not determine whether the payout was made, as the insurer can reject the claim as well.

On the other hand, the incurred claim ratio (ICR) is the percentage of claims that have been paid as well as the outstanding claims at the end of the financial year minus the outstanding claims at the start of the year.

ICR and CSR are different. Hence, choose health insurance wisely for yourself and your family members. The insurance provider you select should have a good ICR and needs to be a trustworthy long-term investment.

Other Factors to Keep in Mind While Choosing a Health Plan

Though ICR is an important measure of an insurer’s health and ability to fulfil claims, it is not a sole yardstick to judge an insurance company’s health or capacity. Also, keep the following factors in mind apart from the ICR.

  1. Claim Settlement Time

A high incurred claim ratio or even a high claim settlement ratio (CSR) is not a definite yardstick of efficient or prompt customer service.

For example, ABC insurance company may have an ICR of 105% but it does not imply that the settlement process is fast and customer-friendly. ABC may be settling more claims than they are collecting premiums, but it’s of no use if they are taking 4-6 months to settle a single claim.

Health Insurance plans at Finserv MARKETS have one of the fastest claims settlement processes in the industry with 24×7 claim support and highly knowledgeable and supportive customer support personnel.

  1. New Entrants

Owing to low premium collections in the initial years, some new entrants in the market may show a significantly high ICR. That is not a cause for alarm because the insurance company may have witnessed a high number of claims in the initial years.

  1. Type of Insurance Products

Incurred claim ratio may differ for various types of general insurance policies sold by the company such as health, motor, fire, marine, crops, etc. The total ICR is calculated as an average of these products.

Another important factor to consider while buying a health insurance policy is the inclusions and exclusions of your policy, such as pre-existing diseases, alternative therapies, diagnostic expenses, etc.

In conclusion, don’t rely on just one yardstick to select the best health insurance company in India, but look from a holistic perspective before you apply for medical insurance. Health Insurance plans available on Finserv MARKETS, is one of the leading insurers in the country with a very healthy incurred claim ratio and one of the best claim settlement ratios in the market.

Read our top blogs to know more about health insurance in India:

Finserv MARKETS, a subsidiary of Bajaj Finserv, is a one-stop digital marketplace that has been created for consumers on the go. It offers 500+ financial and lifestyle products, all at one place. At Finserv MARKETS, we understand that every individual is different. And that’s why we have invested in creating a proposition – Offers You Value. A value proposition that ensures you get offers which are tailor-made for you. We also offer an amazing product range and unique set of online offers across Loans, Insurance, Investment, Payments and an exclusive EMI store. Be it in helping you achieve your financial life goals or offering you the latest gadgets, we strive to offer what you are looking for. From simple and fast loan application processes to seamless and hassle-free claim-settlements, from no cost EMIs to 4 hour product deliveries, we work towards fulfilling all your personal and financial needs. What’s more, now enjoy the same benefits in just one click with our Finserv MARKETS App!


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Bajaj Finserv Direct Limited ("BFDL") is primarily engaged in distribution of financial products and services through its digital platform (“Bajaj Finserv MARKETS”) and inter alia renders services of customer acquisition, providing preliminary credit support activities, fulfilment services and post-acquisition customer services to Banks, NBFCs, HFCs. BFDL is also a registered Corporate Agent (Composite) under valid IRDAI registration number: CA0551 valid till 10-Apr-2024 for solicitation and servicing of Insurance Products. Registered Office: Bajaj Auto Limited Complex, Mumbai – Pune Road, Akurdi, Pune – 411 035 CIN: U65923PN2014PLC150522