Claim Settlement Ratio vs Incurred Claim Ratio: Key Differences

If an insurance company settles a certain proportion of claims in a given year, that percentage is called the claim settlement ratio. In simple words, it tells you whether an insurer has a track record of paying when it matters most to customers.

For example, if an insurer gets 1,000 claims in a year and honours 980 of them, the CSR is 98%. A higher CSR means greater reliability, and it becomes an important metric when you are evaluating contenders for life insurance, because your family’s financial security depends on timely payouts

At Axis Max Life Insurance, the claim settlement ratio in FY 2024–25 was 99.70%. That means nearly every valid claim was honoured, reinforcing trust and transparency.

With a simple formula, we can calculate CSR of any insurance company. All you need is no. of claims settled and total received claims within a financial year. Let’s find out.

CSR = (Total claims settled /Total claims received) × 100

Suppose an Insurance company X receives 10,000 claims in a year and settles 9,970 of them. So, as per the formula the Claims settlement ratio of X becomes:

(9,970/ 10,000) × 100 = 99.70%

A high CSR means that the insurance company always pays claims that are genuine. But a low CSR does the opposite, which means more delays or rejections. So, a high CSR is one of the gold standard checks of an Insurers’ health.

This could be caused by bad underwriting or not giving full disclosures. A claim settlement ratio shows how dependable your insurer is at the time of making your claim.

The incurred claim ratio meaning is quite different. It’s a metric that shows how much claim is paid against the premium received in a financial year. It mainly shows profitability and financial health of the insurance company.
For example, if an insurer collects Rs. 100 crore in insurance premiums and pays Rs. 85 crore as claims, the ICR is 85%.

Like CSR, we can also calculate Incurred claim ratio (ICR) with a help a simple formula. For calculation purposes, claims paid values and premium earned. Check it below.
ICR = (Claims paid/ Premiums earned) × 100

Let's say an insurer earns ₹500 crore in premiums and pays ₹400 crore as claims, then
ICR = (400 Cr./500 Cr.) × 100 = 80%

• High ICR (above 100%): The insurer is paying out more than it earns, which may raise concerns about its financial sustainability.
• Low ICR (below 50%): Suggests premium collected is higher compared to claims paid, which also means that the insurer is in better financial health. This can also mean that customers are trying to lead a healthier life resulting in fewer claims and hence lower ICR.
• Balanced ICR (70–90%): Shows healthy claim payments while keeping the business sustainable.

Understanding how to read Claim Settlement Ratio (CSR) and Incurred Claims Ratio (ICR) helps you assess an insurer’s reliability and financial health. These metrics reveal how efficiently and consistently the company settles claims over time.

Before buying insurance, it’s important to know which ratio matters most for your policy type. CSR and ICR highlight different aspects of an insurer’s reliability and payout behavior, helping you make a more informed choice.

Both CSR and ICR are very important metrics to look for while selecting an insurance provider, but it is important to understand they answer different questions. CSR measures reliability in claim settlement, while ICR reflects a balance between claims paid and premiums collected.

At Axis Max Life Insurance, we believe in complete transparency. Our consistently strong and improving CSR of 99.70% in FY 2023–24 is a testament to that commitment.