IRDA recently published the Annual Report for FY 2015-16. Let us find out the IRDA Incurred Claim Ratio 2015-16 and which is Best Health Insurance Company in 2017 in India.
Note:-I wrote the latest IRDA Incurred Claim Ratio. Please refer the latest post “IRDA Incurred Claim Ratio 2016-17 | Best Health Insurance Company in 2018“.
What is the meaning of Incurred Claim Ratio or ICR?
Incurred Claim Ratio or ICR is a ratio of the total value of claims paid or settled to the total premium collected in any given year. This can be calculated as Incurred Claim Ratio or ICR=(Total Value of Claims Paid/Total Premiums collected)*100.
For example, let us say Company ABC settled the total claim amount of Rs.90 Cr in the year 2015-16. In the same year, it collected Rs.100 Cr as a total premium. In this situation, the incurred ratio stands to be 90%.
This Incurred Claim Ratio is applicable only to non-life insurance companies. For life insurance companies, IRDA publishes Claim Settlement Ratio. I have already written a post on the same. You can refer it at “IRDA Claim Settlement Ratio 2015-16 | Best Life Insurance Company in 2017“.
What to judge from the Incurred Claim Ratio or ICR?
This is the one of identifying the financial health of non-life insurance companies.
# Incurred Claim Ratio or ICR more than 100%
It indicates that for every Rs.100 they collecting as premium, they are paying more than Rs.100 as a claim for a year. In simple terms, your income is Rs.100 but your expenses are Rs.100 or more. So instead of profit, they are into loss.
# Incurred Claim Ratio or ICR less than 100%
It indicates that for every Rs.100 they collecting as premium, they are paying less than Rs.100 as a claim for a year. Such companies are making a profit as your income is Rs.100 but expenses are less than Rs.100.
What it indicates that less ICR means the company is in profit or eyeing on profit. So either they may insure the less risky individuals or groups (customers rarely come forward for a claim) or rejecting the claims just to profit.
However, rejecting claims only on grounds to profit will not work out for any company. They have to look for reputation, future growth, and regular guidelines. Hence, simply for the sake of profit making, they can’t deny claims.
In my view, going with companies of high ICR or low ICR is risky. Hence, always choose a company which is in between both these points.
Remember once again, ICR is not main criteria in selecting health insurance. However, it is one among many criteria.
IRDA Incurred Claim Ratio 2015-16
Now let us concentrate on IRDA’s Annual Report for 2015-16. We will check the IRDA Incurred Claim Ratio 2015-16 and identify which is the Best Health Insurance Company in 2017 in India.
Here, I will divide the health insurance companies into 3 categories. One as public sector companies, second as private companies and the third one as standalone health insurance companies.
IRDA Incurred Claim Ratio 2015-16 for Public Sector Health Insurance Companies
Below is the data for the public sector companies.
There is a jump in ICR New India’s ICR. Last year, it was 98.78%. However, this year it is at 114.64%.
The Oriental Insurance’s ICR reduced from earlier 117% to currently at 114% ( a marginal).
IRDA Incurred Claim Ratio 2015-16 for Private Sector Health Insurance Companies
In below chart, I will show you the ICR of private sector health insurance companies.
I marked with red for those companies whose ICR is below 50% and above 100%. I marked with blue for those companies whose ICR ranges from less than 100% to 80%. I marked with green for those companies whose ICR ranges from above 50% to less than 80%.
IRDA Incurred Claim Ratio 2015-16 for Standalone Health Insurance Companies
In below image, I will share you the IRDA Incurred Claim Ratio 2015-16 for Standalone Health Insurance Companies.
You notice that ICR ratio of all these standalone health insurance companies stands between 50% to 80%.
How efficiently General Insurance Companies handling Grievances of customers?
Above we saw the data related to their finance and how many claims they handled for FY 2015-16. Let us now concentrate on the numbers related to customers grievances. How many insurers resolved and how much pending?
In below image, I will show you the data of all General Insurance Companies Grievance Status for FY 2015-16.
Notice that in private sector companies, the worst customer grievance handling companies are Bajaj, ICICI, Reliance and SBI.
Whereas, in case of public sector companies, the numbers are worst (except United India). But all standalone insurers managed the grievances nicely.
Best Health Insurance in India in 2017 -Checklist to shortlist the product
Now we understood the financial health of insurance companies. Let us move forward and identify the points before selecting the health insurance.
# Coverage Amount-Concentrate on Sum Insured and think beyond the current hospitalization expenses. If premium costing you more, then fill the gap with the super top up plans.
# Buy early-Buying at the earlier age is best than postponing it. We don’t know the health issues. Hence, the insurer may reject your proposal. Hence, always buy immediately and never postpone.
# Understand the cover-Identify the features you want to cover. Covering all NOT POSSIBLE. Hence, try to identify the product which covers many illness.
#Individual or Family Floater-Decide whether you want to go for individual or family floater. It is always best to go for an individual if age of any one member of family is so high than the others. For example, in a family of 4 the oldest person’s age is 65 years and rest of other 3 members age is less than 50 years, then better to buy an individual plan for that 65 years old individual and rest 3 members can buy family floater.
Because the premium is fixed based on the age of oldest person also.
# Entry Age and renewable clause-Check the entry age and for how long one can renew it.
# Identify the company which covers existing diseases at early. Usually, all insurance companies have a waiting period 3-4 years for existing diseases. However, if your concern is to cover the existing diseases, then give first priority to this point.
# Check for room rent capping.
# Check for the co-payment clause. Higher the co-payment means lower the premium for you. Co-payment means how much you also have to pay in a total bill. If the co-payment clause states 20% co-payment, then for all bills claimed, you have to 20% and the rest 80% will be payable by health insurance company.
# Check for exclusions. If you feel the exclusions listed may be uncomfortable to you, then skip that product.
# Check for hospital network availability in your city or town. The cashless hospital benefit is better than producing the bills and waiting for claim settlement.
# Read carefully the wordings of policy brochure. If you have doubts on any feature, then try to clarify it NOW itself.
# Avoid all common features, which companies try to highlight.
# Check for No Claim Bonus company offers.
# Check treatment wise limit if any.
# Check the premium rates. Especially check the rates for older age rates as few insurers jump the rate drastically for older age coverage.
# Finally, if you feel the sum insured you opting is not within your budget, then go for sum insured according to your affordability and opt for a super top up plans.
Hope this much information is enough for you in shortlisting the health insurance product.