ICR or Incurred Claims Ratio for Health Insurance Companies in India is published by IRDA every year. In Jan 2014, IRDA published the incurred claims ratio for Health Insurance 2012-2013. Incurred Claims Ratio is nothing but the total value of all claims paid by the company divided by the total amount of premium they collected in the same period. This is generally calculated for each financial year.
What does Incurred Claims Ratio indicate?
Incurred Claims Ratio for Health Insurance indicates the company’s ability to pay the claims.
- If it is >100%, it means that the company has given more money away as claim than what it has collected as premium. This is not sustainable for the company and they will tend to either start rejecting some borderline claims, change their product, or increase the price to help manage the claims.
- If it 50-100%, it means that the company has given lesser amount as claims than what it has collected. They are therefore making profits. That is a good sign and it means that the company has not just created a good product but has sold it transparently so that customers are able to understand where to make a claim, and where not to. The company will be able to provide good service as well.
- If ICR is <50%, the company is either selling a high-priced product successfully and/or hardly giving out claims. The company is making very big profits and that is NOT as good as it sounds. Any health insurance company must provide products which actually pay out claims within the right limits. If claims are low, then over time, customers of such products will realize that the health insurance cover is expensive and/or there are too many exclusions in the insurance plan, and they may change to a more efficient product.
So in our view, the ideal value of Incurred Claims Ratio for Health Insurance is in the 75-90% range..
Important : All this assumes that the average age of the customers is the same. If a company is able to get more young customers who are less risky, they will have a low incurred claims ratio, sometimes as less as 40%. This is an indicator of a good company which has successfully marketed its products to acquire a relatively healthy pool of customers. Profits follow, and so does good customer service.
IRDA Incurred Claims Ratio for Health Insurance and Mediclaim companies in India 2011-2012-2013
We have collated the data for the last 2 financial years and they are presented below. We have also shown you the premium collected and claims values so that you also get an idea of how big or small each company is in Health Insurance.
Click on the image below to see it full screen.
Remember that a preferred range of ICR should be 75-90%, with those closer to 85-90% being the best. In this range, companies are making reasonable profits and will be able to service customers well.
Now, this was about Incurred Claims Ratio for Health Insurance. But if your intention is to actually BUY a health insurance plan, then you need to decide on a specific insurance company or health insurance product. And for that, you need to know what % of claims are settled by the company. So don’t forget to see the Claims Settlement Ratio for Health Insurance, which gives you exactly that information. Also, to know the speed of settling claims, don’t forget to find out which health insurance company in India settles claims the fastest!