Incurred Claims Ratio
Claims paid by a general insurer as a percentage of the net premium it earned.
An ICR far below 100% suggests pricing with a wide margin; far above 100% suggests underwriting losses that may lead to future premium hikes. It measures the insurer's book, not your individual claim odds.
Why Incurred Claims Ratio matters when comparing products
The Incurred Claims Ratio (ICR) offers insight into a general insurer's financial health and its underwriting practices. A consistently high ICR across multiple years for a particular product segment might suggest potential premium adjustments in the future. Conversely, a very low ICR could indicate conservative pricing. Understanding this metric can be part of a comprehensive assessment when evaluating different insurance providers and their long-term stability and pricing strategies in the Indian market.
Illustrative example
If a general insurer collects net premiums of ₹100 Crores in a year and pays out ₹85 Crores in claims during the same period, its Incurred Claims Ratio would be 85%. This indicates that for every ₹100 collected in net premiums, ₹85 was used to settle claims. If claims paid were ₹110 Crores, the ICR would be 110%, showing that claims exceeded net premium income.