What is Incurred Claims Ratio (ICR) in Health Insurance?

Health insurances come with many beneficial things, but, to get the best out of it, it is essential to be aware of all of the clauses and obligations to stay financially secure in medical situations.

 

If you want to buy health insurance, group insurance plan or travel inurance for yourself or your family, you should know about the incurred claims ratio. If you have heard this word for the first time, do not worry, we will cover everything about this to ensure you have adequate knowledge.

 

What is the Incurred Claims Ratio?

Every person takes health insurance for financial security in case of unforeseen medical emergencies. The incurred claims ratio is the number of claims that the health insurance provider has received till date.

 

It is different from the claim settlement ratio. The claim settlement ratio showcases the number of claims the health insurance provider approves out of the total number of claims that the company receives.

 

Calculating the incurred claims ratio for any health insurance company is also easy.

 

How to Calculate Incurred Claims Ratio?

You can go through the IRDA papers to know the incurred claims ratios of different health insurance providers. IRDA calculates incurred claims ratio for every health insurance provider in the country and publishes the list regularly. However, if you also want to know how to calculate incurred claims ratio, then there is a formula that you can use.

 

The formula for calculating incurred claims ratio is:

ICR = Net Claims Incurred / Net Premium Earned

 

Where,

Net claims incurred is the total claims that the company has received.

 

Net premium earned is the sum total of the company's earnings in the form of insurance premiums.

 

Now you know the meaning of incurred claims ratio and how to calculate it. So, it is the best time to explain how a proper understanding of incurred claims ratio helps people in choosing the best insurance providers.

 

What is the Use of Incurred Claims Ratio?

By using the incurred claims ratio, insurance buyers can assess the insurance company's financial condition and determine whether it is worth spending the money in premiums in that company.

 

There can be three main scenarios when you calculate an incurred claims ratio.

 

100% ICR

When the ICR of any company is 100%, as an insurance buyer, you can understand that the company is passing the majority of its claims, and everyone who pays the premium and makes a claim receives the sum insured from the insurance provider.

 

On the other hand, 100% ICR also suggests that a company is not making enough money to sustain itself as it is giving out almost all the money earned from premiums in the form of insurance claims. Hence, such insurance providers might not be able to make the sustainable profits necessary to run the company long and are generally not preferred by many people.

 

ICR Below 50%

Every person buys health insurance that can be helpful in time of need. When buying one for yourself, try to avoid insurance providers with an ICR of less than 50%. Such insurance providers maximise their profits by rejecting claims and bringing down their expenses.

 

Also, ICR below 50% indicated that the insured people face difficulties getting their claim approved, and the provider seems to keep on rejecting claims to increase their earnings from premiums.

 

ICR Between 50% - 100%

As health insurance buyers, this is the sweet spot for you all. An ICR between 50% and 100% suggests that the insurance provider maintains a healthy balance between earnings and the claims they pass. Such companies are suitable for long-term health insurance plans, and they'll stay in business for more extended periods.

 

If you are looking for an excellent health insurance plan with good ICR and incredible service that stays by your side in tough times, consider buying Niva Bupa health insurance- Money Saver plan. This plan will save your money on all health-related services, and you'll get a hassle-free experience too.