Health insurance policies have evolved into essential medical and financial resources. Growing medical inflation, which has become a major worry given the rising expense of healthcare services, is mostly to blame for this popularity. Although this popularity has attracted a number of new companies to the health insurance market, it has also caused a great deal of confusion among prospective policyholders. When selecting a health insurance carrier, the marketing gimmicks of a less-than-ideal Claim Settlement Ratio (CSR) or an easy-to-use claim settlement procedure provide significant obstacles.

The tone for a long-term financial commitment to protect your savings during medical emergencies should be set by health insurance providers. This would only be feasible, though, if the health insurance in issue is reliable enough to guarantee long-term viability and have the capacity to manage long-term claim settlement.

This is where health insurance’s Incurred Claim Ratio (ICR) becomes useful.

What is the Health Insurance Incurred Claim Ratio (ICR)?

One of the most important measures in evaluating the legitimacy and dependability of a health insurance company is the Incurred Claim Ratio (ICR). It is computed by taking the ratio of the total number of claims paid out by an insurer in a given year to the total amount of premiums the provider received in the same year, and multiplying the result by 100.

How Is the Incurred Claim Ratio (ICR) of a Health Insurance Provider Calculated?

Let’s look at an example to better understand how to determine a health insurance provider’s incurred claim ratio.

Let’s imagine an insurer received 100 crores in premiums in a single year. The brand paid out 75 crores in claims for the same year. Then, its ICR is determined by –

75 % of 100 * 100 = 75

For health insurers, what does the incurred claim ratio (ICR) mean?

Every statistic used to evaluate the reliability of a health insurance company has a distinct meaning. Regarding ICR, the following factors are crucial:

1.] Potential long-term financial viability of the brand The desire of an insurer to settle claims is revealed by its ICR. The insurer’s solid financial foundation is demonstrated by its ability to strike a balance between its operational profitability and the need to settle claims. As a result, the company you are considering has the potential to be a long-term, reliable insurer for your financial investment.

2.] An insurer’s potential for settling claims An ideal ICR for a brand shows that it is managing its obligations to generate a sizable profit without sacrificing the needs for claim settlement. Because of this, the brand has the financial wherewithal to resolve its disputes going forward. This implies that there will be fewer opportunities for future claim denials or partial settlements. This bodes well for both current and prospective policyholders.

How Can the Incurred Claim Ratio (ICR) Be Used to Select the Best Health Insurance?

Now that you are familiar with the meaning, importance, and calculation of the Incurred Claim Ratio (ICR) in health insurance, let’s examine the various ICR ranges and what they mean for a health insurer.

CASE 1: When the ICR is less than 50.

This suggests that the insurance is slightly more concerned with building up its corporate earnings. As a result, you should anticipate that some of your claim settlements—partial settlements or the denial of legitimate claims—will slip through the cracks.

Recommendation: Avoid these types of insurance.

CASE 2: In the event that the ICR is in the 80s, or marginally higher, between 50 and 70.

This is the ideal ICR range. It demonstrates how the insurance strikes an ideal balance between its commercial earnings and the needs of its clients in terms of claim settlements. This implies that the insurer has excellent long-term financial viability. Even though the numbers are in the 80s, it’s still good since, in this instance, the insurance is giving its clients’ needs a little more priority than profits, which is reasonable given that it has the financial resources to do so.

Recommendation: This is an excellent insurer to go ahead.

CASE 3: Should the ICR surpass 100

In this instance, the insurer is losing money on premiums due to claim settlements. You can be certain that this is a temporary solution, even though it may appear enticing. Given these costs, there’s a good risk the insurer could experience financial difficulties soon, which could jeopardize its long-term viability.

Recommendation: Avoid such insurers.

What is the top health insurers’ 2024 incurred claim ratio (ICR)?

When selecting a provider, a health insurer’s incurred claim ratio is quite important. If you look at the incurred claim ratio of the best health insurance companies in the nation, it clearly reflects this:

Please Note1: The Incurred Claim Ratio from 2020 to 2023 is the basis for the following ranking of the top health insurance companies.

Please Note 2: In order to better comprehend the insurers’ consistency and ICR performance, we have averaged the last three years. After that, we averaged the three years and compared the results to the industry average.

Please Note 3: You must look at the numbers from the most recent financial year, 2022–2023, if you are seeking for the Incurred Claim Ratio (ICR) in Health Insurance for 2024. Nevertheless, we have used the data from the previous three years because a year’s worth of data is insufficient owing to the possibility of inconsistencies.

What Distinguishes the Claim Settlement Ratio (CSR) from the Incurred Claim Ratio (ICR)?

A number of measures are important to consider when evaluating the health of an insurance provider, including the number of network hospitals, the average annual business, the complaint volume, the claim settlement ratio (CSR), and the incurred claim ratio.

Due to their similar phonetics, Claim Settlement Ratio (CSR) and Incurred Claim Ratio are two of the most popular and perplexing of these. Let’s quickly review the distinctions between the Incurred Claim Ratio and the Claim Settlement Ratio.

In summary

You pay premiums for a health insurance plan in order to protect your finances in the event of an emergency. Choosing a health insurance plan has become crucial due to the rising cost of healthcare services. However, health insurance rates are also rising in tandem with the rising expense of healthcare.

Therefore, when picking a health insurance provider, you should exercise caution to choose a brand that will endure in the market for a long time. This will protect you from any inconveniences, such as the unexpected loss of benefits like No-Claim Bonus, which increases your base amount by a predetermined percentage for each year you go without filing a claim. Before choosing a health insurance provider or contacting an expert for more assistance, you may always evaluate health insurers, their metrics, and product offerings.