Claim Settlement Ratio vs Incurred Claims Ratio
Two metrics that both sound like they measure claim performance — but measure different things.
What is the Claim Settlement Ratio (CSR)?
The Claim Settlement Ratio measures the percentage of claims an insurer settled out of all claims it received during a reporting period. For life insurance, IRDAI measures it by count (number of death claims settled ÷ total death claims received + outstanding at start of year).
A CSR of 98% means the insurer settled 98 out of every 100 claims. The remaining 2% were either repudiated (rejected as invalid), withdrawn by the claimant, or pending at year-end.
Source: Life — IRDAI Form L-40 (Claims Data). General/health — IRDAI Form NL-37.View CSR data for all life insurers →
What is the Incurred Claims Ratio (ICR)?
The Incurred Claims Ratio is used in general and health insurance. It measures the net claims incurred by the insurer as a percentage of net earned premium. Unlike CSR, ICR is amount-based (rupees), not count-based.
ICR = Net Claims Incurred ÷ Net Earned Premium × 100.
An ICR of 85% means the insurer paid out ₹85 in claims for every ₹100 it collected in premium. ICR is used by actuaries and underwriters to assess whether a business line is profitable — not whether a specific customer's claim was settled.
Source: IRDAI Form NL-20.View ICR data for all non-life insurers →
Key differences at a glance
| Claim Settlement Ratio | Incurred Claims Ratio | |
|---|---|---|
| Measure unit | Count (number of claims) | Amount (rupees) |
| Applies to | Life insurance (primary) | General and health insurance |
| What it tells you | Proportion of claims settled | Claims cost as % of premium |
| Higher is better? | Yes (for the policyholder) | Neither — context-dependent |
| Source form | L-40, NL-37 | NL-20 |
When to use which
Use CSR when comparing life insurers on whether they pay claims. A CSR above 98% is generally good. Below 95% warrants scrutiny. Compare within the same year, as CSR includes claims pending from prior periods and can vary by portfolio mix.
Use ICR when assessing general or health insurer financial health. An ICR below 70% may indicate under-reserving or underpaying claims. Above 100% means the insurer is paying out more in claims than it earns in premium — unsustainable long-term. 75–90% is a broadly healthy range, but it depends heavily on the product mix and investment income.
ICR is not the right metric if you want to know "will my claim get paid." CSR is not the right metric if you want to know "is this insurer financially prudent." They answer different questions.
Important caveats
CSR can be gamed by pending claims. If an insurer delays processing claims across the year-end date, they don't appear in either the numerator (settled) or denominator (received during year) until the following year. The ratio can look better than it is. Look at both CSR and the repudiation ratio together.
ICR doesn't capture speed or customer experience. An insurer can have a perfectly acceptable ICR and still take 90 days to settle a claim. ICR measures financial ratios; CSR (or claim processing time, where data is available) measures customer experience.