# Incurred Claims Ratio 2022 – Check whether your Health Insurance Company is good or bad

IRDA Incurred Claims Ratio for 2022 – How good is your health insurance company?

There are 33 health insurance companies that are offering health insurance plans in India. This includes private health insurance companies, public sector health insurance companies and standalone health insurance companies. IRDA annual report for 2020-21 was published a few weeks back. This annual report contains a key element which is Incurred Claims Ratio (ICR) pertaining to health insurance companies. This ratio can help to choose a good health insurance plan in India. What is incurred Claim Ratio? What is the Incurred claims ratio of health insurance companies of 2020-21 (applicable for 2022)? How good is your health insurance company on this parameter?

Also Read: Best Health Insurance Plan in India

What is Incurred Claims Ratio (ICR)?

Incurred Claims Ratio (ICR) is the ratio computed based on total claims paid by the insurance company over the total premiums received during the financial year. IRDA publishes the claims ratio every year in their annual report. Incurred Ratio applies only for health insurance companies.

How the Incurred Claims Ratio (ICR) computed?

Here is the formula:

The total amount of claims paid / Total Net Premiums received during the financial year.

Let me explain with an example

X Health insurance company has received Rs 100 Crores towards health insurance premium and paid Rs 80 Crores towards health insurance claims during a financial year. In this case, incurred claims ratio is 85% (Rs 85 Crore / Rs 100 Crores x 100).

Incurred Claims Ratio vs. Claim Settlement Ratio – What is the difference?

Here are the differences between these two ratios.

1) Incurred Settlement Ratio is the total amount of claims paid over the total premiums received during the period. This is computed for health insurance companies.

Claim Settlement Ratio is the number of claims paid over the total claims received.  This is computed for life insurance companies.

2) ICR can be more than 0% and even more than 100%. There is no definitive number.

However Claim Settlement Ratio would be between 1% to 100%. It would not cross 100.

3) ICR ideal ratio could be 60% to 90%.

However, in case of Claim Settement Ratio, the higher could be better. Higher Claim Settlement Ratio could help you to choose a good term insurance plan. Recent IRDA Claim Settlement Ratio for 2022 indicate 15+ life insurance companies having over 95% claim settlement ratio.

Latest Incurred Claims Ratio for 2022 (IRDA Report)

IRDA report contains incurred claims ratio for private health insurance companies, public health insurance companies and standalone health insurance companies.

Latest Incurred Claims Ratio for 2022 – Private Health Insurance Companies

Here are the incurred claims ratio for the last year and current year.

S No Insurer 2019-20 2020-21
1 Acko General Insurance 21.08 84.64
2 Bajaj Allianz General Insurance 81.96 77.31
3 Bharti AXA General Insurance 77.50 65.37
4 Cholamandalam MS General Insurance 40.67 77.35
5 Edelweiss General Insurance 113.05 111.57
6 Future Generali India Insurance 62.52 90.04
7 Go Digit General Insurance 51.83 63.80
8 HDFC ERG0 General Insurance 69.01 79.30
9 ICICI Lombard General Insurance 69.90 78.00
10 IFFCO Tokio General Insurance 95.66 99.49
11 Kotak Mahindra General Insurance 49.22 55.17
12 Liberty General Insurance 87.78 76.98
13 Magma HDI General Insurance 72.87 62.70
14 Navi General Insurance 34.69 26.78
15 Raheja DBE General Insurance 85.07 97.22
16 Reliance General Insurance 89.36 93.96
17 Royal Sundaram General Insurance 63.55 67.88
18 SBI General Insurance 50.54 60.72
19 Shriram General Insurance 96.64 4.84
20 Tata AIG General Insurance 66.61 67.27
21 Universal Sompo General Insurance 76.68 111.23
Private Sector Insurers Total 72.55 78.44

Latest Incurred Claims Ratio for 2022 – Public Sector Health Insurance Companies

Here are the incurred claims ratio for the last year and current year.

S No Insurer 2019-20 2020-21
1 National Insurance 103.30 101.09
2 The New India Assurance 100.83 92.79
3 The Oriental Insurance 104.97 112.51
4 United India Insurance 104.24 106.04
Public Sector Insurers Total 102.91 101.02

Incurred Claims Ratio for 2022 – Standalone Health Insurance Companies

Here are the incurred claims ratio for the last year and current year.

S No Insurer 2019-20 2020-21
1 Aditya Birla Health insurance 49.08 49.99
2 Care Health Insurance 59.13 55.15
3 HDFC ERG0 Health Insurance* 73.69 NA
4 ManipalCigna Health Insurance 61.64 61.13
5 Max Bupa Health Insurance 53.51 56.09
6 Reliance Health Insurance 62.17 45.68
7 Star Health and Allied Insurance 65.91 94.44
Stand-alone Health Insurers Total 64.13 75.43

How to check whether your health insurance company is good or not?

Incurred claims ratio means, a health insurance company’s ability to make payments towards claims received during the year.

a) Incurred Claim Ratio > 100%

This ratio means that your insurance company is making settlements higher than the total premiums received by the company.

This means the company is paying all premiums received and not keeping anything towards profits and even to meet expenses. In simple terms, the company is incurring losses for that year where it has > 100% ICR.

The underwriting skills of the health insurance company could be poor.

In future, there are higher chances that insurance company starts rejecting claims.  This could be disaster if you have taken health insurance plan.

b) Incurred Claims Ratio between 50% to 100%

This means that the insurance company is making health insurance settlements between 50% to 100% of total premiums received by the company during that year.

While the company is making fair settlements, it also enjoys profits.

The company is selling qualified health insurance policies.

In future, there are good chances that insurance company keeps honoring the claims in the same way, that is indicated in the health insurance policy document.

c) Incurred Claims Ratio <50%

In this case, the insurance company is making health insurance settlements between 0% to 50% of total premiums received by the company during that year.

This means it is making good profits and might be rejecting majority of the claims.

The company could be selling health insurance policy that is hard for anyone to claim.

In future, there are higher chances that insurance company keeps paying lower claims in the same way. Even this could turn to be worse if you taken the health insurance from such companies.

Also Read: How good is LIC’s new Dhan Rekha Insurance Plan?

Why Incurred Claims Ratio might not always show correct picture?

In some scenarios, claims ratio can be wrong.

1) Time taken for settlement claims – If the time taken for settling claims is high (e.g. It might take 1 month to 6 month period for claim settlement), ICR can show low in that year as it is settled in the next year.

2) New Health Insurance Company’s has earnings – If the heath insurance company is new, it might want to gain reputation and could be more flexible in a health insurance plan and settle most of the claims. In such case ICR would show very high.

3) Established health insurance companies can have sophisticated plan: In such case the claims could be done only based on the parameters within the limits specified in the health insurance plan document and ICR could be low.

4) In Specific instances, claims ratio could be higher: If there are heavy floods or earthquakes in specific cities in India or like covid, settlements could be high and claims might be high.

One should always review and consider these parameters while choosing a good health insurance plan.

What is the ideal Incurred Claims Ratio?

There are no standard guidelines on what should be the ideal incurred claims ratio. However, one can consider ICR of 60% to 90% as an ideal which indicates that company is able to honor majority of the claims and also making some profits in a year.