How to Calculate Incurred Claim Ratio in Health Insurance?

People nowadays have plenty of options when it comes to buying a health insurance plan for themselves or their family. To choose wisely, experts recommend comparing insurers based on key parameters. One such parameter is the Claim Settlement Ratio (CSR), but it is not the only metric. Incurred Claim Ratio (ICR) is another useful yardstick for evaluating the performance of an insurer. Let's learn more about ICR in health insurance.

Read More

Policybazaar exclusive benefits
30 minutes claim support##
(In 120+ cities)
Relationship manager
For every customer
24*7 claims assistance
In 30 mins. guaranteed*
Instant policy issuance
No medical tests~
People trust Policybazaar^
9.7 crore
Registered consumers
51
Insurance partners
4.9 crore
Policies sold
Policybazaar is one of India's leading digital insurance platform
0%
Find affordable plans with up to 25% Discount**

Select members you want to insure

  • More Members
  • Back
    Continue
    By clicking on “Continue”, you agree to our Privacy Policy and Terms of use
    Maximum child sum can be 4
    This will help us calculate the premium & discounts for your family
    Previous step
    Continue
    This will help us to find the network of Cashless Hospitals in your city

      Popular Cities

      Previous step
      Continue
      Get to plans directly next time you visit us
      Please provide your active international number
      Previous step
      Continue
      We will find you the plans that cover your condition.

      Do any member(s) have any existing illnesses for which they take regular medication?

      Get Updates on WhatsApp

      Previous step

      When did you recover from Covid-19?

      Some plans are available only after a certain time

      Previous step

      Meaning of Incurred Claim Ratio in Health Insurance

      Incurred Claim Ratio, often shortened as ICR, is the ratio of the net claim settled by the insurer to the net premiums collected in any given year. This ratio offers insight into the financial stability of the insurance provider. When choosing a mediclaim plan, it is advisable to consider health insurance companies with a balanced ICR.

      The Insurance Regulatory and Development Authority of India (IRDAI) publishes annual reports containing the latest ICR data for all general and health insurance companies in India. Notably, while the Incurred Claim Ratio is a useful factor to consider, it should not be the sole basis for your decision.

      How to Calculate ICR in Insurance?

      The ICR of any health insurance company can be calculated by dividing the net claims incurred by the net premiums collected in a financial year.

      The Incurred Claim Ratio formula is:

      Incurred Claim Ratio = Net Claims Incurred / Net Premiums Collected

      Let's understand this with the help of an example.

      For example, in 2023, a company earned ₹10 lakh in premiums and settled total claim of ₹9 lakh. In this case, the ICR will be 90% for 2023.

      Significance of the Incurred Claim Ratio

      Generally, the Incurred Claim Ratio indicates the financial health of a company. A high ICR is considered good for investors and existing policyholders because it shows that the insurance company is successfully settling the claims raised. Therefore, you can rely more on insurers having a high ICR. But from the insurer's perspective, a higher ICR ratio indicates lower profits.

      For instance, in the above example, a 90% of ICR indicates that 90% of the premiums collected or earned in the year are spent towards settling claims and the balance 10% is the profit margin. If the ratio in 2024 increases to 95%, the profit of the insurer will fall from 10% to 5%, which will be bad from the company's revenue experience but good for the customer. Moreover, the ratio above 100% indicates that the insurer is incurring losses because the premium collection is not sufficient enough to settle claims and so the company is probably using its reserves to pay for claims, which is not a good indicator.

      Factors to Consider While Calculating Incurred Claim Ratio

      Though the Incurred Claim Ratio is a good metric to measure the company's performance, yet it does not reflect the bigger picture. Here are some of the crucial factors that you must keep in mind when calculating ICR:

      1. Time Taken to Settle Claims

        Though the ICR measures the claims settled against the premium collected, it does not take into consideration the time taken for settling the claim. For instance, an insurer with a good ICR of 90-95% might still take 4-6 months to settle claims. This delay can result in a frustrating experience for policyholders, even if the insurer maintains a favourable ratio. This means that a smooth and timely claim settlement process is equally important.

      2. Low Earnings Initially

        A start-up insurer may not earn substantial premium in the initial years of operation and the claims experienced may be high. As such, the Incurred Claim Ratio will tend to cross 100% which should not be interpreted as the insurer making a loss because the initial years may have a higher claim incidence.

      3. Claims Management Practices

        ICR does not reflect how effectively claims are managed. Insurers with hassle-free, and customer-friendly claim settlement processes are more likely to offer a better experience, even if their ICR is moderate compared to others.

      FAQs

      • Q1. How to calculate claim ratio in health insurance?

        Ans: The claim ratio in health insurance is calculated by dividing the total claims paid by the insurance company by the total premiums collected. It is expressed as a percentage and helps insurers determine how much of the premium income is being used to pay for claims.
      • Q2. How much incurred claim ratio is good?

        Ans: An Incurred Claim Ratio (ICR) between 80% and 100% is generally considered good. This range shows that the insurer is using the premiums collected efficiently to pay for claims.
      • Q3. Is Incurred Claim Ratio (ICR) same as Claim Settlement Ratio (CSR)?

        Ans: No, ICR and CSR are not the same. They are two different metrics used in insurance. The Incurred Claim Ratio shows the percentage of the total premiums collected by an insurance company that is spent on paying claims. On the other hand, the Claim Settlement Ratio indicates the proportion of claims settled by the insurance provider out of the total claims received.
      Confused which plan to buy?
      Get expert advice at your home
      Book at your convenience
      No obligation to buy
      Trusted and reliable advice
      Book a FREE home visit ›
      Search
      Disclaimer: The list mentioned is according to the alphabetical order of the insurance companies. Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. For complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website www.irdai.gov.in

      Health Insurance Articles

      • Recent Article
      • Popular Articles
      28 Mar 2025

      OPD Health Insurance for Senior Citizens: What...

      As people age, their health deteriorates over time, making them

      Read more
      27 Mar 2025

      How OPD in Health Insurance Can Help You Save...

      When it comes to health insurance, people usually focus on hefty

      Read more
      27 Mar 2025

      What is IPD Full Form in Medical Terms?

      The IPD full form in medical terms is "In-patient Department"

      Read more
      25 Mar 2025

      What is OPD Full Form in Medical Terms?

      In medical terms, OPD full form is “Outpatient Department”. It

      Read more
      28 Feb 2025

      Does Health Insurance Cover Physiotherapy in...

      Physiotherapy is commonly used to treat health issues that affect

      Read more

      Zero Waiting Period in Health Insurance Plans

      Every medical insurance plan comes with a few terms & conditions, and the waiting period is one of them. A

      Read more

      List of Health Insurance Plans for Senior Citizens

      Senior citizens are the most prone to diseases. Considering the medical inflation in India, buying health insurance

      Read more

      Waiting Period in Health Insurance

      The waiting period in medical insurance refers to the duration before which certain medical conditions or diseases

      Read more

      How to Cancel Your Health Insurance Policy &...

      Having a health insurance policy is not a choice but a necessity today. It ensures the right health coverage for you

      Read more

      Know Everything About E-Insurance Account

      Today, you can buy insurance for almost everything. After all, it is the best way to prepare yourself financially

      Read more

      *We will respond in the first instance within 30 minutes of the customers contacting us. 30-minute claim support service is for the purpose of giving reasonable assistance to the policyholder in pursuance of the claim. Settlement of claim (including cashless claim) is the responsibility of the insurer as per policy terms and conditions. The 30- minute claim support is subject to our operations not being impacted by a system failure or force majeure event or for reasons beyond our control. For further details, 24x7 Claims Support Helpline can be reached out at 1800-258-5881.

      *Product information is authentic and solely based on the information received from the Insurer. Policybazaar is acting only as a facilitator and claims settlement shall be at the sole discretion of the Insurer. Policybazaar does not provide any medical or surgical advice or diagnosis and is not responsible for your interactions / treatment by a medical practitioner/hospital. Please consult a registered medical practitioner for any medical or surgical advice. The Information that you obtain or receive from Policybazaar, and its employees, or otherwise on the Website is for informational purposes only. As per the Insurance guidelines, you are allowed to cancel the policy with-in 30 days from the date of Issuance of policy.This option is available incase of policies with a term of one year or more.

      *All the health insurance plans cover hospitalization expenses including COVID-19 treatment cover up to the specified limits. You can also buy specific COVID-19 health insurance policies such as Corona Kavach Policy and Corona Rakshak policy.

      **All savings and online discounts are provided by insurers as per IRDAI approved insurance plans. #Tax Benefits are subject to changes in tax laws. GST Exemptions depend on fulfilment of qualification criteria and submission of relevant documents.

      *₹1748/month is the starting price for a 1 crore health insurance for an 18-year-old male, with no pre-existing diseases. Discount on renewal premium is subject to the number of wellness points earned in the health insurance policy. For more details about the plans, please read the sale brochure carefully to get upto 100% discount on renewal premium.

      *₹400/month is the starting price for ₹ 5 lakh Health insurance for a 30 year old male & 29 years old female, living in Delhi with no pre-existing diseases

      *₹541/month is the starting price for ₹ 10 lakh Health insurance for a 30 year old male & 29 years old female, living in Delhi with no pre-existing diseases

      *₹762/month is the starting price for ₹ 1 Crore Health insurance for a 30 year old male & 29 years old female, living in Delhi with no pre-existing diseases

      *₹243/month(₹ 8/day) is the starting price for a 5 lakh health insurance for a 20-year-old male, non-smoker, living in Bengaluru with no pre-existing diseases

      *₹2020/month is the starting price for ₹ 1 Cr Health insurance for a 50 year old male & 50 years old female, living in Bangalore with no pre-existing diseases rounded off to nearest 10.

      *₹390/month (₹13 per day) is starting price for 1 cr. Health insurance for 25 years old male, with pre-existing diseases, residing from tier 1 city rounded off to the nearest 10.

      *No medical tests are required unless requested by the insurer’s underwriter. In-case of pre-existing diseases relevant medical proof would be required as per the terms and condition of the policy opted.

      *The values taken for effective cost calculation are indicative values and may change as per the selected plan.

      *Coverage upto double the amount of Sum Insured is available on certain covers for a minimum plan of Rs. 5 Lakh on the first claim only to an individual of upto 45 years of age with no pre-existing diseases. The benefit is available with or without extra cost depending on the plan chosen.

      *Coverage of pre-existing diseases is provided by insurer as per their underwriting policy.

      *The scope of coverage may vary from plan to plan.

      ~Source: Google Review Rating available on:- http://bit.ly/3J20bXZ

      ##On ground claim assistance is available in 114 cities

      Tax Benefits are subject to changes in tax laws. GST Exemption depends on fulfilment of qualification criteria and submission of relevant documents as required by the insurers. For more details on risk factors, terms and conditions, please read the sales brochure and applicable rules and regulation carefully before concluding a sale.

      STANDARD TERMS AND CONDITIONS APPLY. For more details on risk factors, terms and conditions, please read the sales brochure carefully before concluding a sale.

      Policybazaar is a registered Composite Broker |Registration No. 742, Valid till 09/06/2024, License category- Composite Broker| Visitors are hereby informed that their information submitted on the website may be shared with insurers.

      Policybazaar Insurance Brokers Private Limited | CIN: U74999HR2014PTC053454 | Registered Office - Plot No.119, Sector - 44, Gurgaon, Haryana - 122001 Contact Us | Legal and Admin Policies

      © Copyright 2008-2024 policybazaar.com. All Rights Reserved.

      top
      Close
      Download the Policybazaar app
      to manage all your insurance needs.
      INSTALL