Incurred Claim Ratio v/s Claim Settlement Ratio


Before going into the technical nuances such as incurred claim ratio and claim settlement ratio, we need to understand the basics of a medical insurance plan. Health insurance is basically an agreement between two parties – the policyholder and the insurer. The policyholder agrees to pay monthly or regular premiums to the insurer for a decided period. On the other hand, the insurer agrees to compensate the sum insured to the policyholder during a medical emergency. 

Now, while you file a claim, the amount you will receive is dependent on two factors – Incurred Claim Ratio (ICR) and Claim Settlement Ratio (CSR). There is also a difference between the two factors, which you must understand while applying for a health insurance plans

What is Incurred Claim Ratio (ICR)?

It is the ratio of the total number of claims or the total value of claims agreed by the insurer to the total value of premiums paid by the policyholder to the insurance company within a given period. Suppose, the ICR of a particular company is 75%. This means that if the total premium collected by the company over a certain period is INR 1000. Then, if you claim the sum insured within that period, you can get INR 750. The remaining amount of INR 250 is the profit of that company.

Before choosing a health insurance provider, you should check their ICR. If the ICR is more than 100%, this means the company is suffering losses at the moment and may not honor your claim. As a result, it may either increase the premium payments or alter the policies of the company to make it profitable once again. Therefore, it is not safe to purchase a health insurance plan from such an insurer.

The ideal ICR is between 50% and 100%. This means that the company is offering good plans as well as making profits. You must always go for insurance plans with ICR between 50% and 100% such as the Max Bupa Health Recharge Plan. If ICR is less than 50%, it means that the company is making enormous profits either by taking high premiums or by rejecting claims. 

What is Claim Settlement Ratio (CSR)?

As the name suggests, it is the ratio of the number of claims settled by the health insurance company to the total number of claims made to the policy. For example, the CSR of a company is 80%, which means the company has accepted 80 claims from the policyholders out of 100. 

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Difference between the ICR and CSR

  • ICR gives a more accurate picture of a company’s ability and history of providing proper claims whereas CSR is a less accurate indicator as it is not accurately mentioned in most cases by the health insurance company.
  • The ICR is measured for a particular period of time. This means both the factors of the ratio must be within the same period. On the other hand, no particular period of time is considered in the case of a CSR. This makes it more inconsistent.  

Therefore, you must check the ICR or the CSR or both of them before deciding on your health insurance plan. You must go through different policies offered by several companies and select the best out of them. The Max Bupa Health Recharge Plan can be a great option. Besides charging affordable premiums, it has a great ICR and CSR. It is an individual or a family floater plan. The sum insured can be up to INR 95 lakh.