Claim Settlement Ratio Vs Incurred Claim Ratio - Know the Difference

Buying health insurance is an important decision. While checking the coverage and premium of a health plan are non-negotiable, you must also check the Claim Settlement Ratio and the Incurred Claim Ratio of the insurance company before buying. However, people often get confused between Claim Settlement Ratio and Incurred Claim Ratio. This article states the difference between the two.

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      What is Claim Settlement Ratio (CSR) in Health Insurance?

      Claim Settlement Ratio or CSR refers to the total number of claims settled by an insurance company in ratio to the total number of claims received. For instance, in case the claim settlement ratio of an insurance company is 92%, then it implies that about92 claims were honoured by the insurer out of every 100 claims received.

      The claim settlement ratio acts as an indicator to measure the health of an insurance company. It can be used to understand how likely an insurance company is to settle your claim. The higher is the claim settlement ratio, the higher is the probability of your claim getting honoured.

      However, CSR does not consider the time taken to settle an insurance claim. A company can have a high claim settlement ratio despite taking months to settle the claims.

      Where to Check Claim Settlement Ratio of a Health Insurance Company?

      The data for the claim settlement ratio of an insurance company can be found on its official website. The CSR for all insurance companies is not published by the Insurance Regulatory & Development Authority of India (IRDAI).

      Moreover, the CSR available on the website will be for the entire general insurance and not specific to health insurance claims. Thus, the claim settlement ratio does not provide the actual picture of health insurance claim settlement by an insurance company.

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

      Incurred Claim Ratio or ICR refers to the total claim amount paid by the insurance company in ratio to the total premium amount collected in a financial year. For instance, if the incurred claim ratio of a health insurance provider is 88%, then it means that the insurer pays Rs 88 towards claim payment for every Rs 100 of premium collected. The remaining Rs 12 is considered as profit for the insurance company.

      The incurred claim ratio depicts the financial health of the insurance company. It indicates how financially able the insurance company is to pay an insurance claim. If the ICR of an insurance company is more than 100%, it means that the company is paying more towards claim settlement as compared to the premiums received. This could indicate that the insurer is suffering from financial losses and may either hike premiums or reject borderline claims.

      If the ICR is between 50% to 100%, it means that the insurance company is making profits and people are buying insurance from them. It also implies that the policyholders of the company are well of the claim procedures and when to not raise a claim.

      In case the ICR of an insurance company is lower than 50%, it indicates that the company is making enormous profits by paying fewer claims than the premiums received. This could either mean that the insurance company is rejecting more claims or is charging exorbitantly high premiums. This situation can also arise if most policyholders are healthy and do not raise claims, the probability of which is very low.

      Where to Check Incurred Claim Ratio of an Insurance Company?

      The incurred claim ratio of all general and health insurance companies is released annually by the IRDAI. The insurance regulator provides the total ICR for the company as well as separate ICR for different types of general insurance. Thus, you can check an insurance company’s incurred claim ratio for health insurance by referring to the annual report of IRDAI.

      Claim Settlement Ratio vs Incurred Claim Ratio

      Take a look at the differences between the Claim Settlement Ratio and the Incurred Claim Ratio in the table given below:


      Claim Settlement Ratio (CSR)

      Incurred Claim Ratio (ICR)


      It is the ratio between the total claims settled to the total claims received.

      It is the ratio between the total claims paid to the total premiums received.


      Published by the insurance company on its official website

      Published by IRDAI in its annual report

      Specific to Health Insurance Claims

      A single CSR for the entire company is available.

      Separate ICR for health insurance claims for all companies are available

      Ideal Ratio

      Higher is the ICR, more is the probability of claim settlement

      ICR between 50% to 100% is ideal

      Claim Settlement Period

      It does not consider the claim settlement period.

      It considers the time taken to settle the claims.


      Less reliable indicator to measure the health of an insurance company

      More reliable indicator to estimate the financial health of an insurance company

      Summing It Up

      People often get lured to attractive benefits and buy a health plan without in-depth research. To avoid being unhappy with your health insurance policy later or paying a higher premium, make sure to check the claim settlement ratio and the incurred claim ratio of the health insurance provider before buying the policy. Do understand the difference between CSR and ICR clearly before you make a decision.

      Disclaimer: Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by an insurer.

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