What is the Ideal Incurred Claim Ratio?
Claim Settlement Ratio (OND 2018)
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Health insurance is an emerging sector in India, offering a plethora of health insurance plans. If you are a newbie in health insurance investment, then it becomes overwhelming to choose the right health insurance policy. Coverage, exclusions, premium, and network hospitals are the factors that influence your buying decision. But, amongst them, the incurred claim ratio is the most important factor that you should consider before opting for medical insurance. In this article, you can read about the incurred claim ratio and how it helps you to choose the right health insurance plan.
Incurred Claim Ratio means the ability of a health insurance company to make the payments towards the claims received during the year. IRDA publishes the incurred claim ratio details every year. It is a yardstick that is used to measure the performance of the insurer. Experts opine that the health insurance company with a moderate incurred claim ratio should be an ideal choice for investment, and you can bank upon it for financial security.
Incurred Claim Ratio and Claim Settlement Ratio are two important jargons that are often used in the health insurance segment. It is essential to understand the difference between these two terminologies so that you make the right decision when buying a health insurance policy. Incurred Claim Ratio is a measure of the net claims settled by an insurer in a financial year as against the total premium amount received in the same period. This terminology is often used in the general insurance segment. Again, 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
Here you can interpret these below statements to know how ICR can help you to choose the right health insurance plan.
Incurred claim ratio should not be confused with the claim settlement ratio. ICR and CSR are different. The incurred claim ratio is the total amount of claims paid over the total premiums received during the year whereas claim settlement ratio is the number of claims paid over the total claims received by the health insurance company, during the year.
Thus, you should act wisely while selecting health insurance plans for you or for your family. Check the health insurance policies offered by Care Health Insurance (Formerly Religare Health Insurance) that has a good ICR and trustworthy to invest the money for future security.
The ideal Incurred claim ratio lies between 70%-90%, so, you should opt for the health insurance company that has moderate ICR.