It can be seen that the amount of compensation given by health insurance companies in India has increased significantly. According to the statistics released by the Insurance Development Authority of India (IRDA), the Incurred Claim Ratio (ICR) provided by insurance companies has increased to 105.68 percent in the year 2021-22.
Rate of compensation…
While the medical insurance companies have collected a premium of Rs.100, the compensation provided by them is Rs.106. This is a loss for the insurance companies but a gain for the policyholders.
Generally, a 100 percent underwriting amount means that the insurance company is profitable. The lower the compensation ratio of medical insurance companies, the more profitable they are. For example, a company charges a premium of Rs. But if it offers Rs.80 as compensation, its profit margin is 20%. Companies can survive only if the compensation amount is about 15% – 20% less than the premium.
In 2021-22, there has been a significant increase in Medicare reimbursement rates for private and public insurance companies offering Medicare policies.