- Insurance companies should have a minimum solvency ratio of 150%
- Higher the solvency ratio, better will be the claim payout
- Right to knock on Irda’s door for refusal to pay claim
New Delhi. Generally, we all look at the features available under the policy, amount of cover and returns while buying life or health insurance. Apart from this, we do not pay attention to other things at all. However, insurance experts say that apart from the policy, it is very important to check the financial health of the insurer ie the insurance company. If the financial health of the insurance company is not good, then even after paying the premium on time, the insured will not be able to get the benefit of insurance. We are telling you how you can easily check the financial health of an insurance company.
Before buying insurance from any insurance company, check its solvency ratio. According to insurance regulator IRDA, life insurance, health and general insurance companies should have a minimum solvency ratio of 150%. The solvency ratio of an insurance company indicates that it has more assets than liabilities. If the solvency ratio is more than 150 per cent, there is no apprehension about the insurance company getting into financial trouble. The higher the solvency ratio of the company, the better the financial position of the insurance company to pay the claims.
claim settlement ratio
After seeing the solvency ratio of the insurance company, definitely check the claim settlement ratio. Through this, you can get information about the claim paid by the company in comparison to the total claim made on the company. This ratio tells how well the insurance company is able to settle the claims made on it. The higher the ratio, the better it is for the customer.
Persistence ratio is calculated by dividing the number of policies in force out of the total number of policies issued by the insurance company. Persistence ratio is important in the sense that it tells how satisfied the policy holders are with the policy that they have. If the policyholder is satisfied, he will continue the policy which will increase the company’s ratio. Also, if the ratio is high, it shows that the company has been selling the right policy to the customer.
Insurance regulator IRDA is there to help
Insurance experts say insurance regulator Irda has the power to take action if insurance companies fail to meet their solvency ratio. It monitors the solvency ratio as it determines the company’s ability to pay claims. If the insurance company refuses to pay the claim, then the insured has the right to approach IRDA. IRDA gives the verdict in favor of the insured.