Claim Settlement Ratio vs Incurred Claim Ratio
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When deciding to choose a health insurance company, it is not only the premiums or the features that need to be compared. Claim Settlement Ratio (CSR) and Incurred Claim Ratio (ICR) are two crucial metrics that can be used to determine the reliability of an insurer. In most cases, customers tend to mix up these two or think they are similar. However, in an actual sense, each ratio has something very different and provides a distinct idea of the reliability of an insurance company.
This guide dissects the claim ratio incurred vs the claim settlement ratio in an understandable manner that includes examples, misconceptions, and ideal benchmarks that will enable you to confidently and effectively make a decision.
The Claim Settlement Ratio (CSR) is the percentage of total claims an insurer settles out of the total claims it receives in a financial year. In simple terms, CSR indicates how successful a company is in honouring the claims raised by policyholders.
A high CSR suggests:
Customers tend to rely on CSR as the initial sign of the reliability of an insurer, particularly when they are buying their first-time health insurance cover.
The Incurred Claim Ratio (ICR) represents the ratio of the total claims paid by the insurer to the total premiums collected during a financial year. If CSR tells you “how many claims are settled,” ICR reveals “how an insurer is managing money.”
ICR Formula
ICR = (Total Claims Paid ÷ Total Premium Collected) × 100
To fully understand what the incurred claim ratio, it is important to know what it reveals about an insurer’s financial health and service quality.
The ICR ratio is critical for understanding long-term sustainability. You want a company that settles claims but also manages its finances well enough to stay strong for decades.
Although both ratios relate to claims, they serve totally different purposes. Understanding the difference between the incurred claim ratio and claim settlement ratio helps customers avoid common confusion.
Feature
Claim Settlement Ratio (CSR)
Incurred Claim Ratio (ICR)
Meaning
Percentage of claims settled out of total claims received
Claims paid vs premiums collected
Purpose
Indicates claim approval efficiency
Indicates financial stability
Ideal Target
Higher is better
Balanced is better
Shows If Insurer Rejects Claims?
Yes
Not directly
Shows Profitability?
No
Customer Use
To check the claim support reliability
To check long-term financial strength
Simply put:
Both metrics give different viewpoints and must be considered together when comparing insurers.
Customers mainly look at coverage, premium, and network hospitals. But understanding the incurred claim ratio vs claim settlement ratio is equally important because it directly impacts your claim experience.
Here’s why both CSR and ICR matter:
Most experts recommend choosing a health insurance company that falls within the following benchmarks:
Above 95% - Indicates strong claim support, efficient approval processes, and a customer-focused approach.
Between 70% and 90% - Shows the company is healthy, sustainable, and managing claims and premiums responsibly.
Anything beyond these ranges must be analysed carefully before choosing the insurer.
To understand these ratios practically, let’s look at a simple example.
Example 1: Claim Settlement Ratio
CSR = (7,600 ÷ 8,000) × 100 = 95%
This means the insurer successfully paid 95 out of every 100 claims.
Example 2: Incurred Claim Ratio
ICR = (375 ÷ 500) × 100 = 75%
This indicates the insurer used 75% of its collected premiums for claim payouts, reflecting a financially stable position.
Interpretation
When an insurer has both these metrics in balance, it signals a strong, customer-friendly, financially stable organisation.
Many people misunderstand ICR and CSR due to marketing messages or incomplete information. Let’s clear common myths:
Fact: A very high ICR may signal financial instability. Balanced ICR is healthier.
Fact: Low ICR may simply mean the insurer collects higher premiums than necessary. It can also indicate lower claim volumes.
Fact: CSR doesn’t reveal financial health. An insurer may have high CSR but unsustainable ICR.
Fact: They measure entirely different parameters and cannot be interchanged.
Understanding these myths helps customers avoid incorrect assumptions when selecting an insurance provider.
You can easily verify both ratios before choosing your insurer. Here’s how:
Always verify the ratios of the last financial year, as numbers vary every year, and indicate the current performance of an insurer.
ManipalCigna Health Insurance is known for its customer-centric focus, wide hospital network, and strong claim support. While figures vary each financial year, the company has consistently maintained a strong claim settlement ratio and a balanced incurred claim ratio, matching industry benchmarks recommended for financially stable insurers.
ManipalCigna’s claim servicing system is designed for:
Their sustainable ICR and dependable claim handling make them a preferred insurer for customers who prioritise both trust and long-term financial safety.
Understanding the distinction between the incurred claim ratio and the claim settlement ratio helps you evaluate an insurer from two powerful angles - claim performance and financial stability. CSR shows how often claims are settled, while ICR shows whether the company is managing money responsibly. Customers should always look for a combination of high CSR and balanced ICR to ensure trust, reliability, and long-term protection.
Together, these ratios give you a complete picture of an insurer’s health and their commitment to honouring claims during medical emergencies.
Discover the Sarvah range of ManipalCigna Health Insurance that offers all-inclusive, broad coverage, and a fast, transparent, and customer-centric claim process.
The proportion of total claims paid over the total premium collected by an insurer during a financial year is referred to as ICR. It demonstrates the efficiency of the insurer to pay claims as compared to the premiums it receives.
ICR shows the financial health of an insurer, while CSR shows the percentage of claims settled. CSR indicates reliability; ICR indicates sustainability. Both are important in choosing a health insurer.
The best ICR is between 70 and 90%. It indicates that the insurer is paying claims in a responsible manner and is, at the same time, financially stable.
ICR = (Total Claims Paid ÷ Total Premium Collected) × 100. For example, if an insurer collects ₹100 crore in premiums and pays ₹80 crore in claims, its ICR is 80%.
Both matter. CSR shows how likely your claim will be approved. ICR shows whether the company is financially strong enough to continue paying claims long-term.
