Indian health insurance incurred claims ratio
I was trying to calculate the incurred claims ratio for the New
Assurance Assurance Co. (an Indian insurance company) for health
insurance from the company's public disclosure information. This seems
like it should be a simple thing, but it doesn't agree with the values
published by India's Insurance Regulatory and Development Authority
(IRDAI). This is just an example. I would also like to know this
statistic for other insurance companies.
The definition of Incurred Claims Ratio is
Net Claims Incurred / Net Earned Premium
The IRDAI calculation in on IRDAI_English_Annual_Report_2018-19.pdf,
which is at www.irdai.gov.in/admincms/cms/uploadedfiles/annual%20reports/IRDAI%20English%20Annual%20Report%202018-19.pdf
The calculation is on pg 164 of pamphlet, Pgs 188 of PDF (Statement 14), first table, second row.
2018/2019
Net earned premium (crores) Claims incurred (crores) Incurred Claims Ratio (%)
7448.10 7726.84 103.74
But this doesn't agree with the values given in the New India
Assurance FY 2018-2019 public disclosure documents.
It suffices to look at the Q4 FY 2018-2019 public disclosure
documents, which can be found at www.newindia.co.in/portal/readMore/PublicDisclosure or by
searching for "new india assurance public disclosure".
The direct URL is www.newindia.co.in/cms/96659ada-2d42-43a2-9ecb-2b71f9e369a2/Public%20Disclosures%20March%202019%20Final.pdf
First the premium earned value is in the NL-4 document, specifically
the value at the bottom row ("Premium Earned (Net)") of the column:
HEALTH -> UPTO THE QTR ENDED 31.03.2019
is 69384056. This is in thousands, so converting to crores (ten
millions), gives 6938.4056 crores.
Similarly, the claims incurred value is in the NL-5 document,
specifically the value at the bottom row ("Total Claims Incurred") of
the column:
HEALTH -> UPTO THE QTR ENDED 31.03.2019
is 69050967 (in thousands), which is 6905.0967 crores.
HEALTH -> UPTO THE QTR ENDED 31.03.2019
The ratio is 6905.0967/6938.4056 = 0.9952. I.e. 99.52%.
I'd like to resolve the discrepancy. Am I doing the calculation that
uses the public disclosure information wrong?
(2)2 Comments
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This answer expands Dheer's answer by showing the calculation. As he
says, IRDAI gets its Incurred Claims Ratio for New India Assurance by
lumping Health Insurance and Personal Insurance together. The values
from New India Assurance Public Disclosure documents look like this:
Health Total Premium Earned (Net) ? (000) (NL-4)
69384056 = 6938.4056 Cr.
Personal Accident Total Premium Earned (Net) ? (000) (NL-4)
5096956 = 509.6956 Cr.
Health + Personal Accident Total Premium Earned (Net) ? (000) (NL-4)
74481012 = 7448.1012 Cr.
Health Total claims incurred ? (000) (NL-5)
69050967 = 6905.0967 Cr.
Personal Accident Total claims incurred ? (000) (NL-5)
8217452 = 821.7452 Cr.
Health + Personal Accident Total claims incurred ? (000) (NL-5)
77268419 = 7726.8419 Cr.
Then the Incurred Claims Ratio, using both Health and Personal
Accident total premium earned and incurred claims ratio, is
7726.8419 / 7448.1012 = 103.74%
Takeaways:
I can't see any reason to lump Health and Accident Insurance together
here. They are unrelated things. I think my earlier calculation of
99.52% is correct.
And based on these values, New India Assurance appears to have lost
money on their personal accident insurance premiums that year. And
they don't seem to have made much money on their health insurance
either.
The data in New India is more detailed. The health data in IRDA is sum of health and Personal Accident shown seperately in New India assurance, add up and the numbers match.
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