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Difference Between Incurred Claim Ratio And Claim Settlement Ratio In Health Insurance

Published On Oct 28, 2021 7:10 PM By InsuranceDekho

Health insurance plans are meant to provide financial support to the policyholders by ensuring quality treatment at private hospitals. Health insurance plans come with several features like pre and post hospitalization expenses, domiciliary expenses, inpatient costs, room rents, ambulance charges, no claim bonuses, medication costs, complementary healthcare checkups, co-payments, deductibles, and a lot more. It is important for the policyholders to analyze their requirements before investing in a health insurance plan to make sure that all their demands have been met under the purchased health insurance plan. Health insurance plans come with a waiting period during which the policyholders cannot avail the benefits of the health insurance plan. After the waiting period, the policyholders can raise a claim settlement request and avail the accumulated benefits of their health insurance plan. 

When buying a health insurance plan, it is important to choose the right health insurance provider so that you can conveniently avail the benefits of your health insurance plan. When looking for a suitable health insurance provider, you can consider certain factors like network hospitals, incurred claim ratio, claim settlement ratio, range of products, customer services, and much more. Based on these factors you can compare the health insurance providers, and narrow down your options based on your requirements.

About Incurred Claim Ratio 

The incurred claim ratio of a health insurance plan offered by a health insurance company can be defined as the ratio of total claims settled by the insurer to the total value of the premium paid to the health insurance provider by the policyholders. It is basically the total value of every claim paid by the insurer divided by the total amount of premium collected during the same tenure. This ratio is calculated on an annual basis and can help the policyholders in determining the number of claims accepted by a company in a policy year. It is one of the major factors that is worth considering when looking for a health insurance provider. 

About Claim Settlement Ratio

A claim settlement ratio determines the credibility of a health insurance company to settle claims instantly at the time of a medical emergency. You can consider the health insurance firms with a claim settlement ratio higher than 80% and must compare the CSR’s of the past 5 years to make sure that the company has a consistent record of settling claims on time for their policyholders. The following formula is applied to calculate the claim settlement ratio of a health insurance company: 

CSR of a company = Total claims settled / (total claims received + outstanding claims at the start of the policy year) 

It calculates the ratio of total claims settled by a health insurer out of the total claims received in a policy tenure. You must make a wise choice when choosing a health insurance provider as it can help you in settling your claims on time with no hassles and protect you from the monetary constraints faced at the time of the treatment at a private hospital. 

Difference Between Incurred Claim Ratio And Claim Settlement Ratio In Health Insurance

The incurred claim ratio is considered to be a more accurate factor when choosing a health insurance provider as it shows the ease with which the policyholders can claim their plans with the insurer while the claim settlement ratio is a less accurate indicator, especially when considering the health insurance plans. While determining the incurred claim ratio, the companies take the time required to settle claims into consideration while during the calculation of claim settlement ratio it is not considered. Both the factors in incurred claim ratio must be of the same time period to calculate the ratio. In the case of claim settlement ratio, it can be 6 months or 1 year, which can hamper the decision making of the policyholders while choosing an insurer. 


You must consider the incurred claim ratio and the claim settlement ratio of your desired health insurance company to make a wise choice. You must consider these ratios for the past five years to make sure that the performance of the company has been consistent. You can find these ratios on the official website of the respective health insurance company. 

Also Read: Challenges Related To Cashless Treatment

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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