General Insurance

General Insurance, also known as non-life insurance, comprises of a gamut of insurances that provide specific covers to the insured against specific forms of eventualities. Getting and comparing online quotes saves you time, efforts and money. Different i

How Does ‘Incurred Claim Ratio’ Help you Choose the Best Health Insurance

Everyone wants the best when it comes to health insurance. In fact, while purchasing health insurance for your family or you, there are so many questions that may strike your head. Amongst those questions, a few might be, ‘is the coverage offered going to be sufficient?’; ‘whether the particular plan is affordable?’;

‘how to enhance coverage offered if needed?’ Subsequently, you may have multiple doubts about whether the particular policy that you are willing to take is the best health insurance you further need to explore? Nevertheless, you cannot be sure which health insurance policy to purchase unless you have some facts, based on an IRDAI report. Below are a few facts you should know:

Incurred Claim Ratio (ICR)

The term Incurred Claim Ratio refers to the number of claims incurred by an insurance company during a particular period to the actual total premium collected for the same period. In other words, it is the net cost of claims settled to the net premium collected. Below is the formula to calculate ICR:

Incurred Claim Ratio (ICR) = Net claim settlement cost/Net premium collected

The higher the incurred claim ratio, the lesser the premium earned by the company.

What does ICR signify?

If you want to purchase health insurance, then a higher incurred claims ratio can be beneficial for you. In fact, this is one of the key factors you must consider when buying the best health insurance, as you can gauge the perform ace of the particular insurance company. For example, if an insurance company has 80 percent incurred claims ratio, then it means that the company has spent Rs. 80 on claims settled for every Rs. it earned. The remaining Rs. 20 is the profit earned by the company.

In other words, if an insurance company has considerably high Incurred Claim Ratio, then the company is in the loss. This generally becomes one among the reasons why you get your premium increased sometimes, irrespective of whether you filed any claim in the previous years or not.

How Incurred Claim Ratio (ICR) is different from Claim Settlement Ratio (CSR)?

People often get confuse when asked the difference between incurred claim ratio and claim settlement ratio. Nevertheless, the term claim settlement ratio refers to the number of claims settled by an insurance company to the number of claims it received during an accounting period. For example, if a company has 80 percent claim settlement ratio, then it means that the company has settled 90 out of 100 claims it received during a particular period. The remaining 20 percent claims are either rejected by the company or are still pending due to a valid reason.

Insurance Company – Private Sector

Net Earned Premium (in Lakh)

Net Claims Incurred (in Lakh)

Incurred Claim Ratio (ICR) (2014-15)

Bajaj Allianz Health Insurance

Rs. 69512

Rs. 51152

73.59 percent

Cholamandalam Health Insurance

Rs. 19635

Rs. 10295

52.43 percent

HDFC Health Insurance

Rs. 58145

Rs. 32843

56.48 percent

ICICI Lombard Health Insurance

Rs. 106110

Rs. 92720

87.38 percent

Iffco Tokio Health Insurance

Rs. 29989

Rs. 27714

92.41 percent


As you can see, both Cholamandalam and HDFC health insurance companies have considerably less incurred claim ratio, which indicates that the companies have huge net earned profit for that particular year, respectively. On the other hand, Iffco Tokio health insurance has over 92 percent ICR, which means that the company has spent significantly more than it earned. Thus, it is recommended to opt for an insurance company that has an impressive ICR as well as CSR.