IRDA’s Incurred Claims Ratio 2014-15 & Best Health Insurance Companies in India

Incurred Claims Ratio (ICR) for Health Insurance Companies in India is published by IRDA (Insurance Regulatory & Development Authority) every year. On 19th Jan 2016, IRDA published the incurred claims ratio for Health Insurance 2014-2015.

Based on the IRDA’s annual report (2014-15), I have listed down the top 10 best Health Insurance Companies in India. These health insurance companies have been shortlisted as per ‘Incurred Claims Ratio‘.

What is Incurred Claims Ratio (ICR)?

Incurred Claims Ratio is nothing but the total value of all claims paid by the health insurance company divided by the total amount of premium they collected in the same period. Incurred Claims Ratio indicates the company’s ability to pay the claims.

As an example a 80 percent incurred claims ratio means that for every Rs 1000 of premium earned in a given accounting period, Rs 800 is paid back in the form of benefits (claims). Incurred Claim ratio is the ratio of the claims settled to the premium received.

So, how to analyze the ICR data? Whether a Health Insurance company which has say ICR of 110% is better than a company which has incurred claims ratio of say 85%?? Let us now understand this point.

If ICR is greater than 100%, it means that the company has given more money away as claims than what it has collected as premium. This is not good for the company.

If ICR is less than 100% say in the range of 60% to 90%, it means that the health insurance company has given lesser amount as claims than what it has collected. It means that they are making profits.

If ICR is very low say 30%, it means that either the company is charging higher premium rates than its peers and making huge profits (or) it has a good pool of low-risk (may be youngsters) profile individuals as clients (or even both).

Hence it is better to be with an insurance company which has neither high nor low incurred claim ratio. I believe that the ideal ratio (percentage) range can be anywhere between 60% to 90%.

The main difference between Incurred Claims Ratio and Claim Settlement ratio is – Incurred Claim ratio is the ratio of the claims settled to the premium received. Claim Settlement Ratio (CSR) is the ratio of claims approved to total claims made (received). The higher the CSR the better. Same is not the case with ICR.

Non-Life Insurance companies provide products under various segments like Motor, Health, Home, Personal Accident, Travel, Marine and other types of Insurances. In this post, we are analyzing the ICR details of Health Insurance only.

IRDA’s Data on Incurred Claims Ratio for Health Insurance 2014-15

Below are the details of Non-life insurers’ incurred claims ratio for Health Insurance vertical.

Below are the details of Stand-alone Health Insurers’ incurred claims ratio during 2014-15;

• The net incurred claims of the non-life insurers stood at Rs 55,232 crore in 2014-15 as against Rs 49,179 crore in 2013-14.
• The incurred claims ratio (net incurred claims to net earned premium) of the non-life insurance industry was 81.70 per cent during 2014-15 which is marginally less than the previous year figure of 81.98 per cent.
• You can notice that Public sector non-life insurance companies like National Insurance, Oriental & United have Incurred Claim Ratios of more than 100%. So, does this mean that the PSU Non-life insurance companies are making losses? Kindly note that these companies also provide other types of insurance covers like Fire, Marine, Travel, Motor etc., Their health insurance vertical may not be making profits but other verticals might be generating profits.
• As far as Private General Insurance companies are concerned, the ones which have reasonable and are close to total average ICR (avg ICR of all Pvt companies is 79.17%) have been highlighted in GREEN.  You may prefer buying health insurance policy from these companies.
• All the stand-alone ones or the specialized health insurance companies like Apollo Munich, Max Bupa, Cigna TTK, Religare & Star Health have very good Incurred Claims Ratio which is around 60%. So, it is clear that these are the best health insurance companies and can be preferred to other ones when buying a mediclaim or family floater health insurance plans.

Top 10 Best Health Insurance Companies based on Incurred Claims Ratio 2014-15

I have analyzed and short-listed the best non-life & stand-alone health insurance companies based on the latest Incurred Claims ratio data.

1. Apollo Munich
2. Star Health
3. Max Bupa
4. Cigna TTK
5. Religare
6. Bajaj Allianz
7. Future Generali
8. TATA AIG
9. ICICI Lombard
10. Shriram

Actually Claim Settlement Ratio can be a better indicator than ICR for shortlisting best health insurance companies. But IRDA does not publish CSR details for Health Insurance in its annual report. The CSR details are available in respective company websites. I tried to collate CSR details by visiting respective company websites, but the data which is available there is incomplete. (You can find data under ‘public disclosures’ menu option)

How to buy best Health Insurance plan/policy?

When it comes to health insurance, there is no one-size fits-all plan that you can rely on. Medical Insurance is a contract based policy with legal jargon thrown in. Besides this, a Health Insurance policy has medical terminologies. Of the numerous medical insurance plans in the market, you may find that each one is unique in some way or the other, with its own benefits and limitations.

The Incurred Claim Ratio (or) Claim Settlement Ratio can help you in shortlisting the best health insurance companies but you have to do a lot of research to identify the right and best health insurance plan which suits your requirements. You have to make a comparison of health insurance plans offered by multiple companies. This is where I believe that health insurance comparison websites could be very beneficial.

I hope you find this article useful. Do share your views and comments.

(Image courtesy of fantasista at FreeDigitalPhotos.net) (Reference : IRDA Annual Report)

Kindly continue reading below articles;

• Best Family Floater Health Insurance Plans
• Best Personal Accident Insurance Plans 
• Death Claims Settlement Ratio of Life Insurance Companies 2014-15