There’s no denying the fact that buying a good health insurance policy takes a great deal of comparison and research. We compare the premium, the extent of coverage, the inclusions & exclusions, the claim settlement ratios and several other factors before buying a policy. The Incurred Claim Ratio is a little known yet important metric that can help you determine the ability of an insurer to honor claims successfully. This article explores everything you need to know about Incurred Claim Ratio:
What is Incurred Claim Ratio?
Incurred Claim Ratio or ICR indicates the ability of an insurance company to make successful claim settlements. If the ICR of an insurance company is more than 100%, it indicates that the amount of money given away as claim exceeds the amount collected as premium. Hence, companies who are in such a situation may be facing a financial crunch and may resort to rejecting some borderline claims, raise the price to better manage claims, or change their product altogether.
Ideally, the ICR of an insurance company should be between 70% and 90%. This indicates that the company makes profits by offering quality products and services. However, if the ICR is less than 50%, it means that the company is hardly giving out claims and generating considerable profits as a result. This, however, is not a good indicator as all health insurance companies should offer products that actually pay out claims within the correct limits.
What’s The Difference Between Incurred Claim Ratio and Claim Settlement Ratio?
Many policyholders tend to get confused between Incurred Claim Ratio and Claim Settlement Ratio. While they are closely related, they are different concepts altogether. Claim Settlement Ratio is the percentage of claims settled out of the total number of claims filed. However, at times, claims could get rejected due to poor documentation, lack of proof, or lack of adherence to deadline etc. Hence, the Claim Settlement Ratio may not really establish the credibility of a health insurer. On the other hand, the Incurred Claim Ratio indicates the net claims paid by an insurance company as against the net premiums earned. Therefore, it’s best to compare both factors to determine the quality of a health insurance provider.
Clearly, the Incurred Claim Ratio is an effective parameter for comparing insurance policies. However, it should not be the only factor determining your choice. If you want to end up with the right health insurance policy, it is also important to consider factors such as the reputation of the company, cashless hospital network, the time taken for claim settlement etc. At Finserv MARKETS, we offer health plans that will meet your requirement in every aspect. Besides having an ICR of 77.61%, you can get exclusive health insurance benefits like swift claim settlement, 6000+ cashless hospital network, and coverage up to Rs. 50 Lakh for a reasonable premium. To buy or know more about our Health Insurance plans, visit Finserv MARKETS today!
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