When purchasing health insurance plans for the first time, most people get confused between the incurred claim ratio and the claim settlement ratio.
These ratios play a very important role in selecting the right insurance provider by indicating how efficiently they settle the claims.
Whether you want to enjoy health insurance tax benefits or extensive medical coverage, you must understand your selected insurance provider’s incurred claim and claim settlement ratio.
But how are these two different from each other? We will find that out in the blog. Keep reading!
What Exactly Does a Health Insurance Claim Settlement Ratio Mean?
The Claim Settlement Ratio (CSR) is a ratio of the number of claims settled by the insurance provider to the total number of claims raised by its policyholders.
For instance, if an insurance company boasts of having a CSR of 95%, it means they settled 95 claims out of 100 claims raised by their policyholders.
As mentioned above, CSR acts as a scale to measure the success of an insurance company. It is an important factor to consider when purchasing an insurance scheme as it tells how efficiently the company handles its claim settlement process.
How to Check Claim Settlement Ratio?
Top health insurance providers offer their claim settlement ratio information on their official websites. Many insurers even use it as their USP.
However, if you don’t find any information regarding CSR on the insurer’s website, consider contacting them to confirm the same.
While a CSR indicates the success of the claims settlement process, it doesn’t signify the time taken to settle the claim. Therefore, when querying about the claim settlement ratio, consider asking for the time the company takes to settle the claims.
What is a Health Insurance Incurred Claim Ratio?
Incurred Claim Ratio (ICR) is the ratio of the total premium amount collected by the insurer to the amount paid for settling the total number of claims in a year.
For example, if a company boasts an ICR of 80%, it means that it pays ₹80 for settling the claims out of every ₹100 it collects as a premium amount. In this case, the remaining ₹20 is the profit made by the insurance company.
Incurred Claim Ratio is an important indicator of the financial goodwill and stability of the insurance provider. If the ICR is more than 100%, it can mean that the insurer is paying a huge chunk of its income for settling the claims. This could be an indication of high premiums and claim rejections.
A good ICR lies anywhere between 60% to 80%. It shows that the insurer is fairly profitable and has a good customer base. It also signifies that the company’s claim settlement process is satisfactory.
How to Check Incurred Claim Ratio?
The Incurred Claim Ratio of insurance companies in India is released by the IRDAI (Insurance Regulation and Development Authority of India). So, you can refer to the annual reports of IRDAI to check the ICR of your selected insurance provider.
Claims Settlement Ratio Vs Incurred Claims Ratio: What Are the Differences?
|Claim Settlement Ratio
|Incurred Claim Ratio
|A ratio of the total number of claims received and the total number of claims settled
|A ratio of the total premium collected and the total settled claim amount.
|Where to Check
|On the official website of the insurer.
|Annual ICR reports published by IRDAI.
|The higher value of CSR means higher chances of smooth claim settlement.
|Generally, the ideal ICR lies between 60 to 80%.
|Claim Settlement Period
|It doesn’t take into account the time taken to settle the claim.
|It does take into account the time taken to settle the claim.
Claim settlement ratio and incurred claim ratio are important metrics to consider when choosing a health insurance provider.
While both act as indicators of the success and health of a company, ICR turns out to be more reliable than CSR as a regulatory body, IRDAI, publishes the former. We hope this information helps you in making the right decision.