Incurred Claim Ratio and Claim Settlement Ratio – What’s the Difference?
- Author :
- TATA AIG Team
- ●
- Last Updated On :
- 05/09/2023
Purchasing a health insurance plan is certainly one of the wisest decisions you can make. With the growing costs of healthcare, having a medical insurance plan is a blessing in case of medical emergencies. Even if you have been hospitalised for a long time, you do not have to worry about the costs. Instead, you can keep your focus on recovering fully.
Talking about medical emergencies, one thing that you want at that dire time is a smooth claim settlement process. Unfortunately, there are times when companies cannot settle the process quickly. You might also get paid less than your claim amount. Thus, before you buy a health insurance plan, check two main things — incurred claim ratio and the claim settlement ratio in health insurance.
With Tata AIG, you can go to the website and choose a plan that is suitable for you. You can make use of the health insurance calculator to compare health insurance plans. Also, the process of renewing your health insurance plan is simple and hassle-free. If you need assistance, the customer service executives can help you out with anything, including the settlement of claims.
Now let us get into the details of the incurred claim ratio and the claim settlement ratio in health insurance.
What is Incurred Claim Ratio Meaning?
The health insurance incurred claim ratio is the net claims that the health insurance provider has paid out against the total amount of premium that they have received. For instance, if the company has paid out a claim amount of 90 lakhs against the premium of 1 crore, then the ICR in insurance will be 90%. The better the incurred claim ratio of the insurer, the better the actual financial health of the insurer.
A company that has a very high incurred claim ratio might not be a suitable option as this means that the insurance company is not making good profits, which can be a problem in the long run. Thus, most experts suggest a company with a moderate incurred claim ratio.
Now that you know the incurred claim ratio meaning let us understand some important points regarding ICR in insurance.
Points to Understand About ICR in Insurance
Here are some essential points regarding the health insurance incurred claim ratio that you need to keep in mind:
Time taken for claim settlement
While calculating ICR in insurance, the time taken to settle claims is not accounted for. This means that the company might have a high ICR of 70 or 80%, but the time taken for settling claims might be longer.
Not the right option for startups
A new health insurance company might take longer to accumulate and earn premiums. However, the claims that are raised against the medical insurance plan might be higher in the first few years. Often startups tend to pay more for claim settlements than the premiums that they have earned. This means that their incurred claim ratio might be 100% or more than that. Thus, the ICR in insurance is not always the right indicator for the financial health of any insurance provider.
What is the Claim Settlement Ratio in Health Insurance?
The CSR is the ratio of the total number of claims that the insurance provider has settled to the total number of claims that they have received in a single year. The CSR showcases the company’s dedication to the settlement of claims that they have received. For instance, if the claim settlement ratio of a company is 92%, this means that they have settled 92 out of every 100 claims that they received this year.
If the company has a higher CSR, the company is deemed to be reliable and financially sound. A higher CSR means that the chances of your claim getting settled are also higher. Thus, you must choose a company with a high CSR.
Points to Understand About Claim Settlement Ratio in Health Insurance
Here are some essential points that you need to keep in mind:
Time taken for claim settlement
While calculating CSR, the time taken to settle claims is not taken into account. This means that even if the CSR of the company IS 95%, the time taken to settle the claims might be longer.
Might not be health insurance specific
The CSR is published by the insurance company on their website. So, CSR is not limited to health insurance claims; it includes all other claims received as well.
Difference Between Incurred Claim Ratio And Claim Settlement Ratio
Here is the difference between incurred claim ratio and claim settlement ratio:
| Incurred Claim Ratio | Claim Settlement Ratio | |
|---|---|---|
| Meaning | It is the amount of claim settled to the total premium received. | It is the total number of claims that the provider has settled to the total number of claims they received. |
| Ratio | The Ideal ICR in insurance is between 70% to 90%. But, new companies that accumulate lower premiums might have a higher incurred claim ratio. | The higher the CSR, the higher the chances of your claims getting settled. |
| Publisher | The ICR of the companies is published by the Insurance Regulatory and Development Authority in the annual report. | CSR is published by insurance companies on their websites. |
| Specificity | The incurred claim ratio is specific to the claims filed for health insurance. | The claim settlement ratio is not specific to health insurance and covers all the insurance plans offered by the company. |
Conclusion
It is crucial to know the difference between incurred claim ratio and claim settlement ratio. Although the CSR and ICR might not be fully accurate, they can still give you an idea about the reliability and financial health of any insurance provider. With Tata AIG, you do not have to worry about claim settlement. The process is easy and hassle-free. You will be provided all the assistance that you need, and your claim will be settled as quickly as possible if all the documentation is in order.
Disclaimer / TnC
Your policy is subjected to terms and conditions & inclusions and exclusions mentioned in your policy wording. Please go through the documents carefully.
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