Health Insurance Claim Ratio: Check Before Buying an Insurance Policy
The Incurred Claim Ratio metric of a health insurance company indicates the company’s ability to make payments towards health insurance claims. It is derived by dividing the total amount of claims paid by the insurer with the total premium amount collected in a fiscal year.
If the claim ratio of a health insurance company is more than 100%, it implies that the amount paid towards claim is more than the total premium collected in a year.
So, it means that more than 100% of ICR may not be a good indicator. It indicates that a large portion of the insurance premium has been utilized to cover the actual risk transfer.
In such cases, the insurer’s ability to pay the claim will be low and it will either increase the cost of the premium, or reject some clams or will make complete alterations in the insurance products.
If the ICR of a company ranges from 50 to 100 percent, it means that the premium collected by the insurance company is more than the amount given away as claims.
To cite an example, an ICR of 95% indicates that the company has spent 95 rupees on claims for every 100 rupees collected as premium.
Basically, the ideal Incurred Claim Ratio ranges from 75 to 90 percent indicating a healthy settlement of claims by the insurance company in comparison to the premium collected.
It reflects not only on the insurer’s ability to make profits but also satisfactory sales of its products and helping its customers understand the right time to file a medical claim.
A new insurance company is expected to have a higher ICR if it was not able to earn a substantial premium in the preliminary years of business and met with a high rate of insurance claims.
Health Insurance Incurred Claims Ratio Table
|General Insurance Companies||Incurred Claim Ratio (ICR) in %|
|Oriental Health Insurance||112.11%|
|Apollo Munich Health Insurance||54.99%|
|Bharti AXA Health Insurance||86.84%|
|HDFC ERGO Health Insurance||76.90%|
|Bajaj Allianz Health Insurance||70.41%|
|Cholamandalam MS Health Insurance||72.91%|
|Future Generali Health Insurance||77.31%|
|ICICI Lombard Health Insurance||80.38%|
|TATA-AIG Health Insurance||72.32%|
|IFFCO Tokio Health Insurance||81.96%|
|L&T Health Insurance||77.83%|
|Max Bupa Health Insurance||51.96%|
|Reliance Health Insurance||92.23%|
|National Health Insurance||97.25%|
|Religare Health Insurance||50.52%|
|Star Health and Allied Insurance||60.51%|
|Royal Sundaram Health Insurance||78.13%|
|SBI Health Insurance||75.01%|
|Cigna TTK Health Insurance||48.14%|
|Liberty Health Insurance||79.14%|
|New India Assurance Health Insurance||91.26%|
|United India Insurance||107.06%|
|Universal Sompo Health Insurance||70.91%|
The Incurred Claim Ratio is not indicative of the company’s claim settlement process. In fact, an insurance company with a good health insurance claims ratio can have a longer claim settlement process procedure.
Claim Settlement Ratio of Health Insurance Companies
Claim settlement ratio is also an important factor to consider before buying a policy. Claim settlement ratio indicates the number of claims settled by the insurance company against the claims filed.
Higher Claim settlement ratio means a greater possibility of an insurance claim to be settled.
Insurers with a higher health insurance claim settlement ratio enjoy a good reputation in the market.
You may also like: Top 10 health insurance companies in India
Here’s a Difference between Claim Settlement Ratio and Incurred Claim Ratio
Claim Settlement Ratio and Incurred Claim Ratios are often misunderstood by the customers. They both sound the same but have different roles.
Basically, a claim settlement ratio is the ratio of claims settled to the total number of claims filed in that year.
Therefore, if a company has a claim settlement ratio of 85%, it means that out of 100 claim requests 85 were settled. The remaining 15% are either rejected or are pending approval from the insurance company.
So, Along with ICR and CSR, you should also take into consideration other parameters like policy features, quality of terms and conditions, etc. before making a purchase decision