What is the Ideal Incurred Claim Ratio?
Claim Settlement Ratio (OND 2018)
Network Hospitals across 500 cities
Health insurance is an emerging sector in India. A plethora of health insurance plans are available for customers. If you are a newbie in health insurance investment, it becomes overwhelming to choose the right health insurance policy. Coverage, exclusions, premium, network hospitals, COVID-19 coverage, etc., are several factors that influence your buying decision. However, the incurred claim ratio is the most crucial one you should consider before opting for medical insurance. Here, you can read about the incurred claim ratio and how it helps in your buying decision.
Incurred Claim Ratio (ICR) or Claim Incurred Ratio refers to the proportion of claims paid by a health insurance company against the total amount of premium received during a financial year. IRDAI publishes the incurred claim ratio details every year. It's calculated by the total value of claims paid by the insurance company divided by the amount of premium collected in a financial year. It is a yardstick used to measure the performance of any health insurance company. Experts opine that a company with a moderate incurred claim ratio should be an ideal choice for investment, and you can bank upon it for financial security.
Generally, ICR is used in the general insurance segment. A higher incurred claim ratio is beneficial for policy buyers. For instance, if the incurred claim ratio for an insurer is above 100%, this implies that for every 100 Rupees collected as premium, the insurer is settling a claim more than 100 Rupees. A lower incurred claim ratio does not necessarily mean a loss. In fact, that could imply that the insurer may be making a profit with higher premium collections.
Incurred Claim Ratio (ICR) = Net Claims Incurred/Net Premium Collected
ICR can be one of the deciding factors while choosing a health policy. But your decision should not be based solely on it. Few things to consider are:
Claim Settlement Time:
At times it happens, that health insurance companies manipulate ICR by delaying the settlement of insurance claims. Their ICR may be in the range of 75 %- 85 %, but they may take months to settle the claims. Customers will get the claim settlement in the same financial year, but it can be delayed.
Not a Good for Start-Ups:
Start-ups in the health insurance sector may take time to earn a hefty premium. There is a possibility that the amount paid out as settlements can exceed the amount received as a premium. That results, 100% or above ICR, which does not provide an accurate picture to the customers.
Here you can interpret these below statements to know how ICR can help you to choose the right health insurance plan.
Do not get confused between Incurred Claim Ratio and Claim Settlement Ratio (CSR). These are two different yet necessary jargon often used in the health insurance segment. It is essential to understand the difference between these two terminologies to make an informed decision. The incurred claim ratio is the total amount of claims paid over the total premium received during the year. Simultaneously, the claim settlement ratio is the number of claims paid over the total claims received by the health insurance company during the year. Opt for the company with an average ICR but with higher CSR to stay in a win-win situation.
The ideal Incurred claim ratio lies between 70%-90%, so, you should opt for the health insurance company like us with moderate ICR.
There is a high possibility that, as a customer, you can be stuck in a doubtful situation when it comes to choosing a trustworthy health insurance provider. But do not worry! As our name indicates, we care about your hard-earned money and health. We have 55% ICR, which means your money will be in safe hands. Our ICR metrics indicate that we are working moderately on settling the claims per year and have a list of happy and satisfied customers. So, opt for our health insurance plan and stay safe and protected.
The incurred claim ratio shows the health insurance company's ability to settle the claim.
Yes, you can use it as one of the parameters to check the company's financial ability. However, your decision should not be based on it entirely.
You can use it as one of the deciding factors, but you should consider other crucial aspects of the policy as well that are equally important.
Yes, because a start-up takes time to collect a premium than an already established company comparatively.