In India, the awareness of the general insurance companies needs to be improved, even though there have been many measures taken by IRDAI (The Insurance Regulatory and Development Authority of India) to educate the consumer. Every person must have a general insurance policy for themselves or their family. This helps them in uncertain circumstances where there is a dire need for financial cushion.
Insurance is a legal agreement between you and the insurance company. The General insurance company promises to protect you against any unwanted fiscal issues (per the terms and conditions) in exchange for a monthly, quarterly or annual premium. To buy the best insurance in India, you must understand and know how to evaluate the general insurance companies in India.
Below are some of the points that will help you pick the best general insurance company -
Claim Settlement Ratio: You must check CSR, or Claim Settlement Ratio, first and foremost before purchasing general insurance. It is a percentage of the claim settled by the general insurance company against the total number of claims in a year. You can simply put this as –
CSR = Number of Claims Settled/Number of Claims Raised in a Year
It is a reliable metric to check if your chosen insurance company is the right pick. The higher the CSR, the better your chance of settling your claims. Hence, you must always look for a general insurance company having a CSR of above 90%.
Solvency Ratio: The solvency ratio is an important metric to evaluate the long term debt obligation of the general insurance company. You must always look for a higher solvency ratio. This is because a higher solvency ratio means the assets are more than the liabilities, which means a lesser chance of payment default in the future.
Customer Service: The best general insurance companies in India have excellent customer service. This means they are available 24*7 to answer and address your problems. Always check the insurance provider's review section to see what customer service the company offers. Most insurance companies go with stars - this means the company is good if you see 4 stars or more.
Combined Ratio: The combined ratio is the measure of the profitability of a general insurance company to assess how well it is performing. It is described as the total of incurred losses and operational costs expressed as a proportion of the premium generated. You must always remember that a ratio below 100% means the company is making underwriting profits. Whereas a ratio above 100% means the company is paying out more than it is earning as a premium. So, look for general insurance companies in India with a combined ratio between 70% to 90%.
If you are planning to buy general insurance, use the metrics given above to evaluate the best insurance company. Knowing the company's ins and outs will help you make a sound decision so that you do not face any issues or complications during the challenging times of life. Also, do not get swayed away by the amazing sales pitch. Do your own research and pick the general insurance company that fulfils all your needs.