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Difference Between Incurred Claim Ratio & Claim Settlement Ratio

Janhavi Shinde Janhavi Shinde 23 May 2019

Know more about the key difference between incurred claim ratio vs claim settlement ratio and health insurance online on Coverfox.

You might have come across terms like incurred claim ratio and claim settlement ratio while buying an insurance plan. As a layman, you might find no difference between them. But, that’s not the truth. Read on to know more.

Health Insurance Claim Ratio

Comparing insurance plans provided by different insurers can actually be a very confusing task. There are so many subjective matters that we consider while narrowing down our search. However, we usually skip to consider the objective numbers as well as figures.

Incurred claim ratio and Claim settlement ratio are two such objective factors that you can’t afford to miss out on while buying an insurance plan. Let’s elaborate, in detail, the actual differences between these two ratios that may help you identify the best insurance plan in India.

What is a claim?

Before we go deeper into these ratios, we first need to understand what a claim is. A claim is nothing but a formal communication sent by the insured person to the insurance company for receiving the sum assured/insured as per the policy agreement.

All about Incurred Claim Ratio…

The proportion of claims that is paid out against the total amount of premiums received by the health and general insurance companies is termed as the Incurred Claim Ratio (ICR). Say, for instance, if a particular health insurance company had approved a total claims of Rs.70 crores in the year 2017 against the premiums received amounting to Rs.100 crores, it would specify that the ICR is 70% in 2017.

When the Incurred Claim Ratio of the health/general insurance company is very low, it indicates that the health insurance company’s claim settlement process is extremely rigorous.

Experts say that the insurance company’s market presence may raise doubts in case of a very high ICR. Therefore, it is wise to opt for a health/general insurance company that has a moderate ICR. Simply put, it would be safe to continue using services of the same insurance company year after year without getting worried about the claim rejection.

It is said that the health/general insurance company retains a low amount towards profit-making and in-turn utilizes the amount received as premiums for claim settlement.

Remember, incurred claim ratio indicates the insurer’s ability to pay the claim.

Ideally, a good health/general insurance company would have an Incurred Claim Ratio ranging between 75 and 90%. P.S. ICR is applicable only for standalone health and general insurance plans. ICR is an indicator of the insurance company’s ability to pay off the claims In case the health insurance company has a high ICR, beware!

All about Claim Settlement Ratio

The proportion of the claims that is approved or settled against the total number of claims that the life insurance company had received, is termed as the ‘Claim settlement ratio’ (CSR).

Say, for instance, the claim settlement ratio of a particular life insurance company is 80%, if the company approves the claims amounting to Rs.80 crores against Rs.100 crores, which is the total amount of claims received.

Higher the claim settlement ratio of a life insurer, higher are the chances of your claims getting settled. Since, the claim settlement ratio of the life insurer reflects its reputation, it is advisable to first compare this parameter with different life insurance companies, before opting for one.

A high claim settlement ratio of a life insurance company also indicate that the claim settlement process is robust as compared to the one that has a low claim settlement ratio.

Every year IRDAI publishes a report that mentions the various details about the life insurer such as the claims data, industry average as well as the claim settlement ratio among others.

The main purpose of paying your life insurance premiums diligently is that the life insurer fulfils all its promises when the time arises. One way to ensure the same is by checking the performance of your life insurance company and getting hold of its claim settlement ratio.


CSR is applicable only for life insurance plans. Claim settlement ratio indicates the total number of claims settled. It is wise to opt for a life insurance company with a high claim settlement ratio.

Important points to note

  • While a higher CSR is an indication of a good life insurance company, a high ICR is equally a bad sign for a health/general insurance company. Make sure that a high premium shouldn’t come your way to choose a good insurance plan, if the CSR/ICR is impressive.
  • But, a high Claim settlement ratio also shouldn’t be the only criteria to choose a good life insurance company. You should also consider parameters such as the quality of the service provided, the sensitivity for the claimants as well as the time taken for claim settlement before you narrow down your search.


The numbers may not tell you the entire story, but it may certainly help you find the best value for your money. Therefore, do compare the ICR and the CSR of different insurers before zeroing down your search for the best product under each insurance category.

Janhavi Shinde
Written by Janhavi Shinde
Right from being a Flight Attendant to a Banker and now to a Content Writer, she has tasted success in all the fields. The kinda girl who loves pets and knows how to manage difficult people and events.