Health insurers turning cautious while settling claims

During the financial year (FY) 2019-20, the general & health insurance companies collected health insurance premium to the tune of Rs 50,758 crore, registering a growth of 13 per cent over the previous year. This is excluding personal accident and travel insurance premiums. Though the four public sector general insurers continue to hold a lion’s share with 49 per cent during FY 2019-20, there was a reduction in the market share of public sector insurers against 52 per cent in FY 2018-19. On the flip side, the share of standalone health insurers has surged from 24 per cent in FY 2018-19 to 27 per cent in FY 2019-20. When it comes to the share of health insurance premium in private sector general insurers, their share has remained at 24 per cent in FY 2018-19 and 2019-20. Having said, the incurred claims ratio of general and health insurers suggests that they are getting cautious while settling health insurance claims. 

What is incurred claim ratio? 

Incurred claim ratio (ICR) is the ratio of the net claim that the insurer receives for the premium paid towards insurance policies in a year. Typically, a ratio of less than 100 indicates that insurers are making money. Hence, a low incurred ratio indicates healthy growth prospects and higher profitability in non-life businesses. For instance, an ICR of 85 per cent implies that the company has spent Rs 85 on claims for every Rs 100 collected as premium. Ideally, the ICR should be between 75 per cent and 90 per cent. Below, we have listed the ICR individually as well as sector-wise.