Importance of Selecting the Insurance CompanyHave you ever thought, why do we buy insurance? Well, we buy insurance so that in event of a misfortune, the insurance company should stand by you and help you recover any financial loss and that too without any hassle. The insurance company offers a cover against the premium amount that you end up paying timely. Hence, you may agree by now that the role of the insurance company is pivotal. Let us understand the following parameters that should be taken into consideration by the customers while choosing the insurance company in India. It is a simple indicator to know the financial strength of the insurer.
- Solvency Ratio:
The solvency ratio is the capability of an entity to discharge its liabilities and promises made. It is a simple indicator to know how good or bad the financial strength of an insurer is. So the insurance company that has the highest solvency ratio is the strongest insurance player in the market and highest capability to pay the claim. Today there are some insurance companies in the Indian market whose solvency ratio is below 100% which is less than the regulatory requirement of 150%. So, do you think that they are in a position to pay your claim?
- Claim Settlement Ratio:
Claim settlement ratio (CSR) is the second most important aspect that should be taken into consideration. The claim settlement ratio is the percentage of claims that the insurance company settles against the total claims received. The claim settlement ratio of a company indicates the insurer’s credibility and willingness to pay claims. The rule is simple, the higher the ratio, the more reliable the insurance company is in settling the insurance claim.
- NPS Score:
The net promoter score denotes what a customer says about an insurance company. Out of a sample of say 100 customers, how many customers want to recommend their insurance company to their friends and otherwise. Any score above 70% is deemed good, which means there are more promoters than detractors.
In the spree of grabbing market share, some insurance companies are charging considerably lower premiums. While buying an insurance policy often we consider the insurance premium, yet this should not be the only buying criteria. There is no point in buying a cheap product that may not be of any help when you need it the most.