Compare & Buy Car, Bike and Health Insurance Online - InsuranceDekho
Claim, renew, manage & moreLogin
Hurry Up!
Save upto ₹75,000 on taxes in 80D. Buy a health insurance now!
View Plans

Incurred Claims Ratio: Consider When Choosing a Health Insurance Plan

Updated On Dec 26, 2023

Have you ever wondered whether Incurred Claims Ratio (ICR) is a secret to choosing a reliable health insurance company?

We’ve been in the health insurance industry for years. We have been familiar with ICR and the habits of professional and non-professional policy buyers for years.

We’ve come across a lot of nonsense.

Emulating the Incurred Claims Ratio of insurance companies can somehow slit the struggle of being a professional policy buyer.

Unfortunately, health insurance could be a little complicated if you don’t choose the right policy and the right company.

But in the quagmire of crazy tips and tricks, knowing about ICR has merit.

Shall I explain this?

Incurred Claims Ratio (ICR)

The ICR metric indicates the capability of an insurance company to settle claims. It is calculated based on the total value of all claims paid by the insurer divided by the total amount of premium received by the insurer in a financial year.

The formula is,

Incurred Claim Ratio = Net claims incurred / Net premiums collected.

For instance, say the ICR of an insurance company is 85% in a particular financial year. It means the company during this period has spent Rs. 85 on claims for every Rs. 100 received as premiums. And the balance of 15% is the profit margin. If the ratio increases to 90% in the next financial year, the profit of the insurance company will fall from 15% to 10%, which is not good for the company.

Ideally,

The perfect value of ICR is between 75% and 90%.

This range shows a healthy settlement of claims by the insurance company against the premium.

Remember,

A high ratio is always bad news.

A higher ICR range in health insurance shows lower profits. A higher than 100% ratio means that the insurer is incurring losses as the premium collected is insufficient to pay the claims. In this condition, the insurance company probably utilizes its reserves to settle claims. It’s bad news.

Keep in mind that the Incurred Claims Ratio higher than 100% is not a good indicator. It indicates that the insurance company uses a large part of the premium to cover the actual risk transfer. A higher ICR can be seen in a new company.

Key Points to Remember

Although the incurred claim ratio is a good yardstick for evaluating the performance of the company, it doesn’t let you have the bigger picture. Below are two points to take into account:

Claim Settlement

The ICR evaluates the claim settled against the collected premiums. It doesn’t show the time taken to settle claims. That’s why the insurance company may have a ratio range of 90-95%. The claim settlement procedure may take months, which will harass you. So, on the first hand, you may be happy to see the ICR range of the insurance company, on the other, you may be harassed due to the delay of the claim.

Start-Ups

A new company may collect insufficient premiums during the initial few years of operation. It may experience a higher incurred claim ratio. In such a case, the ICR may go beyond the 100% mark.

Also Read

Claims Related To Diabetes Have Gone Up By 120%

Claims Ratio in Health Insurance - Importance

Conclusion

Hope, you have understood the incurred claims ratio in health insurance. When you buy a policy for you, do consider the ICR of the company, but also keep in mind the two key points mentioned above.

You may also like to know what Waiting Period in Health Insurance is

Health Insurance Coverage Calculator

Who do you want to insured ?

  • Individual
  • Couple
  • Family
  • Parents

Age of eldest insured member ?

Where do you live ?

Metro
Non-Metro
Disclaimer : Actual Coverage might vary basis your location, age and number of members

Best Health Insurance Plans In India

  • Cover 5 L
    Starting at 832/month*
    No room rent limit 100% no claim bonusUnlimited restoration benefits3 years PED waiting period
    View All Features
  • Cover 10 L
    Starting at 739/month*
    No room rent limit Unlimited restoration benefits50% no claim bonus4 Years PED Waiting period
    View All Features
  • Cover 5 L
    Starting at 447/month*
    No room rent limit 33% no claim bonus100% restoration benefits3 years PED waiting period
    View All Features
  • Cover 5 L
    Starting at 1,312/month*
    No room rent limit 50% no claim bonus100% restoration benefits3 yrs PED waiting period
    View All Features
  • Cover 5 L
    Starting at 448/month*
    Single Private A/C Room 20% no claim bonus100% restoration benefits1 year PED waiting period
    View All Features
  • Cover 5 L
    Starting at 664/month*
    No room rent limit 20% no claim bonus100% restoration benefits2 years PED waiting period
    View All Features
  • Cover 5 L
    Starting at 675/month*
    No room rent limit 50% no claim bonusUnlimited restoration benefits3 years PED waiting period
    View All Features
  • Cover 5 L
    Starting at 690/month*
    Single Private A/C Room 100% restoration benefits3 years PED waiting period
    View All Features
  • Cover 5 L
    Starting at 546/month*
    Twin sharing room Zero no claim bonus100% restoration benefits2 years PED waiting period
    View All Features
  • Cover 5 L
    Starting at 566/month*
    No room rent limit 20% no claim bonus100% restoration benefits3 years PED waiting period
    View All Features
  • Cover 5 L
    Starting at 1,770/month*
    Zero no claim bonusNo restoration benefits1 year PED waiting period
    View All Features
  • Cover 40 L
    Starting at 62/month*
  • Cover 2 L
    Starting at 146/month*
  • Cover 5 L
    Starting at 806/month*
    Single Private Room 10% no claim bonus100% restoration benefits2 years PED waiting period
    View All Features
  • Cover 5 L
    Starting at 476/month*
    60% no claim bonus150% restoration benefits4 years PED waiting period
    View All Features
  • Cover 5 L
    Starting at 526/month*
  • Cover 5 L
    Starting at 855/month*
    25% no claim bonus100% restoration benefits4 years PED waiting period
    View All Features
  • Cover 5 L
    Starting at 448/month*
    Single Private A/C Room 20% no claim bonus100% restoration benefits1 year PED waiting period
    View All Features
  • Cover 5 L
    Starting at 396/month*
    No room rent limit Room rent upto 2% of SI Room rent upto 1% of SI No room rent limit
    View All Features
  • Cover 5 L
    Starting at 738/month*
    No room rent limit 50% no claim bonus100% restoration benefits3 yrs PED waiting period
    View All Features
Note: Premium is shown for 18yr old individual of Delhi
Show More

Health Insurance News

People Also Read

Must BuyMust Buy

Why to Buy Health Insurance Policy Online from InsuranceDekho

  • Tax benefit upto 75,000*
  • Claim support everyday 10AM-7PM
  • 66 Lacs+ happy customers

Latest Health Insurance Articles