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

Understanding healthcare insurance can be tricky for both new and current policyholders. Thankfully, digital healthcare insurance is simplifying things and making coverage more accessible. While things are changing, knowing the basics is wise before picking a policy and insurer. Checking an insurance company’s reputation, online reviews, and claim settlement ratio of health insurance is a good idea before buying.

But one important thing that’s often overlooked is the Incurred Claims Ratio (ICR). This blog covers the concept of ICR and how it differs from the claim settlement ratio of best health insurance

What is Incurred Claim Ratio (ICR)?

ICR shows the ratio of settled claims to collected premiums for insurers in a year. It reflects a company’s financial health. Experts advise looking for insurers with a moderate ICR when buying health plans. 

The Insurance Regulatory and Development Authority of India (IRDAI) publishes the ICRs of all insurers yearly. Remember, while ICR matters, don’t rely on it alone when choosing a policy.

How to Calculate ICR?

ICR is a valuable indicator for evaluating the financial stability of healthcare insurance companies. If an insurer’s ICR surpasses 100%, it signifies that claims paid out exceed the premiums collected – for every ₹100 in premiums, over ₹100 are being disbursed in claims. However, a lower ICR doesn’t necessarily imply losses. It might indicate profitable operations due to higher premium earnings.

Formula: Incurred Claim Ratio = Net Claims Incurred / Net Premium Collected.

What Does ICR Indicate?

The incurred claim ratio signifies the following: 

1. ICR > 100%

ICR exceeding 100% indicates that the insurance company has settled claims surpassing the premiums earned in a financial year. While this may benefit policyholders, it signifies company losses and the potential for future claim rejections. Opting against purchasing healthcare insurance from companies with an ICR over 100% is advisable.

2. ICR 50% – 100%

An ICR between 50% and 100% signifies a financially stable insurance company generating profits. The company is capable of funding claim settlements from the accumulated annual premiums. Opting for an insurance provider with an ICR in this range is prudent, ensuring smooth claim settlements.

3. ICR < 50%

An ICR below 50% indicates company profits but also implies many claim rejections. Avoiding insurance providers with an ICR below 50% when considering healthcare insurance purchases is recommended.

What are Other Things to Keep in Mind While Analysing ICR?

Consider the following points when evaluating the ICR of an insurer:

1. Claim Settlement Time

ICR doesn’t account for how long claims take to settle. A company might show a 90-95% ratio but take 4-6 months to settle claims, causing inconvenience.

2. Initial Low Earnings

New insurers might have limited premium earnings, leading to higher claim percentages. It could result in an ICR above 100%, indicating early-stage losses due to more claims.

3. Not Ideal for Start-ups

New mediclaim insurance ventures take time to gather significant premiums. Payouts might exceed premiums, resulting in an ICR of 100% or higher. It can mislead customers. The ICR formula might paint an inaccurate customer picture despite its simplicity.

How is Incurred Claim Ratio Different From Claim Settlement Ratio?

Here are the parameters that show the difference in ICR and claim settlement ratio of health insurance:

Parameters  Claim Settlement Ratio  Incurred Claim Ratio
Definition In the claim settlement ratio for health insurance, the ratio of claims settled to claims raised against a particular healthcare insurance provider is calculated. The sum of incurred claims compared to the total premium collected from policyholders is assessed.
Significance  The health insurance claim settlement ratio IRDA illustrates the insurer’s track record in settling claims and provides insights into the reliability of the healthcare insurance provider. Demonstrates the insurance provider’s financial robustness and indicates the long-standing financial reliability of the company.
Ideal ratio A higher value is more advantageous for policyholders. Between 50% and 100% is good. Ideally, 50% – 70%


ICR holds immense importance for assessing healthcare insurance companies’ financial health. It compares settled claims to collected premiums, offering insights into claim settlement capabilities. An ICR above 100% implies potential losses and claim rejections, while 50% to 100% indicates stability and profits. Moreover, one must consider factors beyond ICR, such as claim settlement time, initial earnings and claim settlement ratio in health insurance.

For good incurred ratio and claim settlement ratio health insurance, choose Niva Bupa. They assure swift claims, financial stability, and customer-centric service, securing one’s health and peace of mind.

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