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Difference Between Incurred Claim Ratio And Claim Settlement Ratio

Updated On Jun 23, 2021

Health insurance plans make for a good investment and purchase. By paying a regular amount, you can safeguard the interests of yourself, as well as your family. Adequate medical attention and healthcare to take care of your illnesses/diseases in the present as well as to stay fit in the future. 

Healthcare is expensive and therefore, it is crucial to choose a health insurance plan that will best suit your needs and circumstances. To do this, you must understand the various factors involving a health insurance plan. Incurred claim ratio and claim settlement ratio are two such factors.

What is Incurred Claim Ratio In Health Insurance?

The Incurred Claim Ratio for a particular health insurance plan is the ratio of the total claims that have been settled by the insurance producer to the total value of premiums that have been paid to the insurance provider. Both of these must be calculated over the same time period. The more the incurred claim ratio, the more the claims that have been accepted by the company. Although a high incurred claim ratio may indicate an easier time getting your claims, if it is more than 100%, it means that the company might be at a loss. In that case, it might not be safe to purchase the plan in the long run.

What is the Claim Settlement Ratio In Health Insurance??

The claim settlement ratio for a specific health insurance plan is the ratio of the number of claims that have been settled by the insurance provider and the total number of claims that have been made to the policy. However, most health insurance policies do not state their particular claim settlement ratios but the overall claim settlement ratios of the insurance provider.

Difference Between Incurred Claim Ratio and Claim Settlement Ratio

The basic difference between incurred claim ratio and claim settlement ratios lies in their very definitions. They are two completely different components that use two different formulas for calculation. 

Incurred Claim Ratio

Claim Settlement Ratio

A more accurate indicator of how easy it can be to get claims from the company.

Less accurate indicator, especially for health insurance plans

The time for the claim settlements is taken into consideration when the ratio is determined. Both the factors of the ratio must be of the same time period.

The time taken for the claim settlement is not taken into consideration. It can be one month or it might even be six. Such inconsistencies might hamper the judgment of a policyholder when they are looking for a plan.

Conclusion

There are many health insurance plans that are easily available. However, it is important to narrow down your search and get the best one for yourself. Health insurance plans are often differentiated from one another using a claim settlement ratio. To have a better idea about what it entails, it is crucial that you know how it differs from the incurred claim ratio of a plan. They are often used interchangeably but they use completely different formulas. Since the incurred claim ratio for a particular health insurance plan is a more accurate indicator of how easy it is to get claims from the plan, it is better to look at that factor. 

Read More: Features and Benefits of Health Insurance Top-up Plans

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Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.

 

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