Difference Between Incurred Claim Ratio & Claim Settlement Ratio

Comparing insurance plans offered by several insurers can be a very difficult undertaking. While narrowing down our search, we analyse a plethora of subjective factors. However, we frequently overlook the importance of objective numbers and figures. Two objective elements that you can't afford to overlook when purchasing an insurance plan are the claim ratio and the claim settlement ratio. Let's look at the specific differences between these two ratios to see if they may help you get the finest insurance plan in India. What exactly is a claim? Before delving more into these ratios, it's important to first define what a claim is. A claim is a formal statement filed by the insured individual to the insurance company in order to get the sum assured/insured as agreed upon in the policy agreement. The Incurred Claim Ratio is all about... The Incurred Claim Ratio is the percentage of claims paid out compared to the total amount of premiums received by health and general insurance firms . When a health/general insurance company's Incurred Claim Ratio is exceptionally low, it means that the health insurance company's claim settlement process is quite strict. According to experts, in the case of a very high ICR, the insurance company's market presence may raise suspicions. As a result, choosing a health/general insurance carrier with a moderate ICR is a good idea. Simply put, it would be safe to continue using the same insurance company's services year after year without fear of a claim denial. The health/general insurance firm keeps a little portion of the premiums for profit and uses the rest for claim settlement. Keep in mind that the incurred claim ratio represents the insurer's ability to pay the claim. An ideal Incurred Claim Ratio for a reputable health/general insurance firm would be between 75 and 90%. P.S. ICR only applies to individual health and general insurance plans. The ICR is a measure of an insurance company's capacity to pay claims. Be cautious if the health insurance company has a high ICR. Everything you need to know about the Claim Settlement Ratio The 'Claim settlement ratio' (CSR) is the percentage of claims that are granted or settled compared to the total number of claims received by the life insurance business . Assume that a life insurance company's claim settlement percentage is 80%, which means that the company approves claims totaling Rs.80 crores out of a total of Rs.100 crores. The higher a life insurer's claim settlement ratio, the more likely your claims will be settled. Because a life insurer's claim settlement ratio reflects its reputation, it's a good idea to evaluate this characteristic across different life insurance firms before choosing one. In comparison to a life insurance business with a low claim settlement ratio, a high claim settlement ratio indicates that the claim settlement process is robust. Every year, the IRDAI issues a report that includes information on the life insurer, such as claims data, industry averages, and claim settlement ratios, among other things. The most important reason to pay your life insurance payments on time is to ensure that the life insurer keeps all of its promises when the time comes. Checking the performance of your life insurance business and obtaining its claim settlement ratio is one approach to ensure this. CSR is exclusively applicable to life insurance policies. The total number of claims settled is represented by the claim settlement ratio. A life insurance company with a high claim settlement ratio is a good choice. Important things to keep in mind A high CSR is a favourable sign for a life insurance firm, whereas a high ICR is a terrible one for a health/general insurance company. If the CSR/ICR is remarkable, make sure that a high premium does not deter you from selecting a decent insurance plan. However, a high Claim Settlement Ratio should not be used as the sole criterion for selecting a decent life insurance provider. Before you narrow down your search, think about things like the quality of the service given, the sensitivity of the claimants, and the time it takes to resolve the claim. Conclusion While numbers may not be able to tell you the whole picture, they can certainly assist you in determining the best value for your money. As a result, before narrowing down your search for the best product in each insurance category, compare the ICR and CSR of various insurers.

Difference Between Incurred Claim Ratio & Claim Settlement Ratio