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 https://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 https://www.newindia.co.in/portal/readMore/PublicDisclosure or by searching for "new india assurance public disclosure".

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?

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.

• Hi Dheer. I checked the numbers, and indeed the numbers match. I'm impressed by this stellar piece of detective work. How did you figure this out? But lumping personal accident insurance together with health doesn't make sense. They are different things. The effect is just to make it look like New India Assurance is losing money on health insurance when they are not. Also, it looks like New India actually is losing money on Personal Accident, paying out around 161% of the premium in claims. Shall I add an answer with the calculations? May 13 '20 at 7:35
• @FaheemMitha you are free to add answer with more details. It took me a while to locate the health in New India assurance page, and it didn't match. So tried to match other segments like fire... On motor realised that there are 2 in New India assurance... So found that personal accident was missing in IRDA, ... Agree it may not be right... But IRDA may have it's own definitions May 13 '20 at 16:43

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.