IRDA publishes “Incurred Claim Ratio” data in its annual report. The Incurred Claims Ratio (ICR) helps you pick health insurance or a general insurance company.
Table Content
- What is the Incurred Claims Ratio?
- ICR 2018-19 – An Analysis of Private and Standalone Health Insurers
- 1. For Private Sector General Insurance Companies
- 2. For Public Sector General Insurance Companies
- 3. For Standalone Health Insurance Companies
- What does ICR mean?
- What’s an Ideal Incurred Claim Ratio Range?
- Difference between ICR and CSR
- Related posts:
What is the Incurred Claims Ratio?
Incurred Claims Ratio (ICR) refers to the total amount of claims paid by a general insurance company divided by the total amount of premium collected during the same period. ICR determines the company’s ability to pay the claims raised by the insured people.
Let’s understand ICR with the help of an example.
For the 90% incurred claims ratio, Rs 900 is paid back as the amount of a claim for every Rs 1000 of premium collected during a given period. ICR is the ratio of the total claims paid to the premiums received.
| Incurred Claims Ratio = Net Claims Incurred/ Net Earned Premium An Incurred Claim Ratio of 75% implies that the company has compensated Rs 75 as claim payout for every Rs 100 collected as premium |
ICR 2018-19 – An Analysis of Private and Standalone Health Insurers
1. For Private Sector General Insurance Companies
| Private Sector General Insurers | Net Earned Premium (in crores) | Claims Incurred (in crores) | Total ICR (FY 2018-19) |
|---|---|---|---|
| Acko | 48.81 | 28.61 | 59% |
| Bajaj Allianz | 7009.78 | 4810.41 | 69% |
| Bharti AXA | 1398.98 | 1076.68 | 77% |
| Cholamandalam MS | 3049.90 | 2335.50 | 77% |
| Future Generali | 1574.71 | 1083.05 | 69% |
| HDFC ERGO | 3810.01 | 2909.18 | 76% |
| Go Digit | 499.98 | 394.11 | 79% |
| ICICI Lombard | 8375.35 | 6308.11 | 75% |
| IFFCO Tokio | 4030.32 | 3558.22 | 88% |
| Kotak Mahindra | 197.35 | 134.32 | 68% |
| Liberty General | 805.44 | 591.05 | 73% |
| Magma HDI | 384.95 | 271.69 | 71% |
| Raheja QBE | 89.57 | 74.78 | 83% |
| Reliance General | 3532.25 | 3031.30 | 86% |
| Royal Sundaram | 2186.19 | 1854.85 | 85% |
| SBI General | 2388.38 | 1720.57 | 72% |
| Shriram General | 2059.43 | 1406.32 | 68% |
| Tata AIG | 4578.21 | 3586.37 | 78% |
| Universal Sompo | 1249.06 | 879.67 | 70% |
| DHFL General | 108.31 | 30.77 | 28% |
| Edelweiss General | 28.81 | 35.31 | 123% |
| Total | 47405.80 | 36120.88 | 76% |
2. For Public Sector General Insurance Companies
| Public Sector General Insurers | Net Earned Premium (in crores) | Claims Incurred (in crores) | Total ICR (FY 2018-19) |
|---|---|---|---|
| National Insurance | 10400.23 | 11434.03 | 109.94% |
| New India Assurance | 21487.59 | 20496.70 | 95.39% |
| Oriental Insurance | 10601.53 | 11248.08 | 106.10% |
| United India | 13104.51 | 14336.09 | 109.40% |
| Total | 55593.85 | 57514.91 | 103.46 |
3. For Standalone Health Insurance Companies
| Standalone Health Insurers | Net Earned Premium (in crores) | Claims Incurred (in crores) | Total ICR (FY 2018-19) |
|---|---|---|---|
| Aditya Birla | 348.23 | 204.11 | 59% |
| HDFC ERGO Health | 1672.90 | 1047.09 | 63% |
| ManipalCigna | 392.52 | 243.14 | 62% |
| Niva Bupa | 659.48 | 355.64 | 54% |
| Reliance Health | 1.36 | 0.18 | 14% |
| Care Health | 1091.20 | 602.67 | 55% |
| Star Health | 3662.37 | 2297.59 | 63% |
| Total | 7828.06 | 4750.43 | 61% |
What does ICR mean?
The Incurred Claims Ratio helps to identify the potential of a general insurance company for making payments towards the claim raised during a financial year.
When ICR is more than 100%: With ICR more than 100% indicates that the amount of claim given is more than the amount collected as premium. As the company is paying more than what is earned, the business is running at a loss and thus, it’s quite tough to sustain the business.
When ICR is between 50% and 90%: It indicates that a general insurance company is collecting a higher premium amount than what is being paid as a claims amount during a financial year. It means the company is making profits and paying for claims as well.
When ICR is less than 50%: It indicates that the company is charging higher premiums for its plans and making huge profits or hardly paying the amount towards the claim. Despite the fact that the company is generating huge profits in the business, it’s not wise to choose insurance products from such a company as you are at the risk of not getting the claim amount.
Note: You can also read IRDA Claim Settlement Ratio 2018-19 for Life Insurance Companies in India. Also, you can know about the Top 10 Health Insurance Companies in India 2020
What’s an Ideal Incurred Claim Ratio Range?
When it comes to choosing a general insurance company for buying health insurance, motor insurance, or other general insurance products, it’s recommended to pick a company having ICR in the range of 75% to 90%. Don’t go for an insurance company having an ICR of more than 100%.
Difference between ICR and CSR
People often get confused between the Incurred Claims Ratio and the Claim Settlement Ratio.
Incurred Claims Ratio is the ratio of total claims paid to the premium collected. For 85% ICR, the company is paying Rs 850 as claims for every Rs 1000 collected as a premium during a financial year.
Claim Settlement Ratio is the number of claims paid to the total number of claims received during a specific period. For instance, the insurance company receives 100 claims and pays for 95 claims, the CSR here would be 95%.
ICR and CSR are completely two different things. ICR applies to general/non-life insurance companies and CSR applies to life insurance companies.
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