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.
What Is the Claim Settlement Ratio in Insurance?
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.
How CSR Works
- If an insurer receives 10,000 claims in a year
- And settles 9,500 of them
- Its CSR = (9,500 ÷ 10,000) × 100 = 95%
Why CSR Matters
A high CSR suggests:
- The insurer is trustworthy
- Your subsequent claims will have more chances of approval.
- The company is stable and financially cost-effective.
- Minimal risk of claims disputes or rejections.
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.
What Is the Incurred Claim Ratio (ICR) in Insurance?
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
Meaning Behind ICR
- A balanced ICR shows that the company is not paying too many claims (which may lead to losses) and not denying too many claims (which may indicate poor customer service).
- A very high ICR may indicate the company is paying more in claims than it earns in premiums.
- A very low ICR may indicate the company is rejecting too many claims or has overpriced premiums.
Meaning of ICR and How It Works
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.
How ICR Reflects an Insurer’s Stability
ICR below 50%
- The insurer is collecting much more in premiums than it pays out.
- Can signal strict claim approvals or expensive premiums.
- Not always a positive sign.
ICR between 70% and 90%
- Sign of a balanced portfolio.
- A healthy indicator of fair claim approvals and sustainable operations.
- Considered ideal for health insurance companies.
ICR above 100%
- The insurer is paying more claims than its premium income.
- Could indicate financial stress or a risky claim environment.
- Good for customers in the short term (more claims honoured), but may push premium hikes in future.
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.
Key Difference Between Incurred Claim Ratio and Claim Settlement Ratio
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 |
Yes |
Customer Use |
To check the claim support reliability |
To check long-term financial strength |
Simply put:
- CSR = trust indicator
- ICR = sustainability indicator
Both metrics give different viewpoints and must be considered together when comparing insurers.
Why Both Ratios Matter While Choosing a Health Insurance Company
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:
- CSR shows claim reliability: High CSR implies that the insurer makes claims promptly and without any unnecessary frustration.
- ICR shows financial stability: A balanced ICR also guarantees that the insurer is in a position to make future claims without aggressive premium revision.
- Together, they prevent risks
- High CSR + Balanced ICR → Best combination
- High CSR + High ICR → The Company could be experiencing financial stress.
- Low CSR + Balanced ICR → The claims can be rejected quite often.
- Improves decision-making: By taking into account both of the ratios, you are guaranteed to select not only a customer-friendly insurer but also a financially sound one.
Ideal Claim Settlement and Incurred Claim Ratio for Insurers
Most experts recommend choosing a health insurance company that falls within the following benchmarks:
Ideal CSR
Above 95% - Indicates strong claim support, efficient approval processes, and a customer-focused approach.
Ideal ICR
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.
Incurred Claim Ratio vs Claim Settlement Ratio: Example Comparison
To understand these ratios practically, let’s look at a simple example.
Example 1: Claim Settlement Ratio
- Total claims received: 8,000
- Total claims settled: 7,600
CSR = (7,600 ÷ 8,000) × 100 = 95%
This means the insurer successfully paid 95 out of every 100 claims.
Example 2: Incurred Claim Ratio
- Total premium collected: ₹500 crore
- Total claims paid: ₹375 crore
ICR = (375 ÷ 500) × 100 = 75%
This indicates the insurer used 75% of its collected premiums for claim payouts, reflecting a financially stable position.
Interpretation
- CSR of 95% → Excellent for customers
- ICR of 75% → Ideal for sustainability
When an insurer has both these metrics in balance, it signals a strong, customer-friendly, financially stable organisation.
Common Misconceptions About Claim Settlement and Incurred Claim Ratios
Many people misunderstand ICR and CSR due to marketing messages or incomplete information. Let’s clear common myths:
Myth 1: High ICR means the insurer is good
Fact:
A very high ICR may signal financial instability. Balanced ICR is healthier.
Myth 2: Low ICR means the insurer denies claims
Fact:
Low ICR may simply mean the insurer collects higher premiums than necessary. It can also indicate lower claim volumes.
Myth 3: CSR alone is enough to judge an insurer
Fact:
CSR doesn’t reveal financial health. An insurer may have high CSR but unsustainable ICR.
Myth 4: Both ratios mean the same thing
Fact:
They measure entirely different parameters and cannot be interchanged.
Understanding these myths helps customers avoid incorrect assumptions when selecting an insurance provider.
How to Check ICR and CSR of Health Insurance Companies
You can easily verify both ratios before choosing your insurer. Here’s how:
Where to check CSR:
- IRDAI Annual Report
- Insurance company website
- Policy brochure
- Third-party insurance comparison portals
Where to check ICR:
- Annual Financial Reports of IRDAI.
- Regulatory disclosures of the company.
- Market information that is publicly accessible.
Always verify the ratios of the last financial year, as numbers vary every year, and indicate the current performance of an insurer.
ManipalCigna’s Claim Settlement Ratio and Incurred Claim Ratio
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:
- Quick claim approval
- 24×7 support
- Digital-first claim processing
- Transparency in documentation
- Cashless treatment at partnered hospitals
Their sustainable ICR and dependable claim handling make them a preferred insurer for customers who prioritise both trust and long-term financial safety.
Conclusion
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.
FAQs on Claim Settlement Ratio vs Incurred Claim Ratio
What is the incurred claim ratio in insurance?
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.
What is the difference between the incurred claim ratio and the claim settlement ratio?
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.
What is a good ICR ratio for 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.
How is the incurred claim ratio calculated?
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%.
Which is more important - claim settlement ratio or incurred claim ratio?
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.
