Incurred claim ratio (ICR), (somewhat equivalent to claim settlement ratio in life insurance parlance) of the non-life insurance industry has witnessed a decline to 85.90% in 2019-20 from 89.16% in the preceding year.
Incurred claims ratio is the claims received 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 business.
For instance, an ICR of 85% implies that the company has spent Rs.85 on claims for every Rs.100 collected as premium.
Since the incurred claim ratio of the non-life industry was less than 100% for all segments, it may have helped the industry to increase profitability to some extent.
Both private insurers and public insurers have witnessed a decline in their incurred claim ratio. While private insurer’s claim ratio fell merely by 1% to 75.52%, public insurer’s claim ratio fell by 5% to 98.28% in 2019-20.
Also, the incurred claims ratio of fire and marine segments have decreased to 78.07% and 71.27% in the year 2019-20 from 90.48% and 84.48% in the previous year respectively. Whereas the incurred claims ratio of health and motor segments has decreased to 85.70% and 85.61% in the year 2019-20 from the previous year’s ratio of 89.34% and 90.60% respectively.
Among public sector general insurers, the incurred claim ratio of National, Oriental and United Insurance stood above 100% at 105.86%, 102.34% and 101.46% respectively. New India insurance’s incurred claim ratio was 91.43% in FY 2019-20.
Similarly, among the private non-life players, Future Generali recorded lowest incurred claim ratio at 59.66% followed by Acko General (60.33%) and Shriram General (65.04%).
In absolute terms, the net incurred claims of the general insurers stood at Rs.1.08 lakh crore in 2019-20 as against Rs.1.01 lakh crore in 2018-19.
Incurred claim ratio of non-life insurance in FY2019-20
|
Sector |
Public Sector |
Private Sector |
Total |
|
Fire |
86.20% |
55.89% |
78.07% |
|
Marine |
71.17% |
71.36% |
71.27% |
|
Motor |
96.54% |
77.95% |
85.61% |
|
Health |
102. 91% |
72.55% |
85.70% |
|
Others |
102.53% |
73.08% |
93.40% |
|
Total |
98.28% |
75.52%% |
85.90% |
