How to choose right insurer for life insurance and health insurance

insurance4-gettyBesides premium and settlement ratios, there are several other metrics you need to consider to pick the right insurer.

Life Insurance
You need to opt for an insurer with lower customer complaints, faster claim settlements and higher customer retention.

High persistency ratio shows trustworthiness
The ratio reflects the insurer’s customer retention record. The higher the persistency ratio, the better it is, as it indicates that more policyholders are renewing their policies, implying higher levels of trust.


*Top five life insurers by market share (first-year premium) for individual, regular premium policies in January 2019.

Fewer complaints means insurer is efficient
Lower the claim and non-claim-related complaints, the better it is. Though it should not be the sole determinant, it reveals insurers’ history of handling complaints.


*Per 10,000 policies/claims reported. #For the current period in case of SBI Life; for the current year for others
Source: Respective life insurers’ public disclosures as on 31 December 2018.

Lesser the claim settlement time, the better it is
An insurer should settle at least 80% of the claims within 30 days of receiving the intimation.


*Individual death claims 2017-18.

Health Insurance
Choosing a health insurance policy requires deeper analysis than just settling for a plan that offers the lowest premiums at the outset.

Check how premiums rise with age
When you buy a health insurance policy, you will have to keep renewing it. Therefore, check the next 10 years’ premiums while comparing policies as they change with age.


*For regular basic policies, **41-45 years

How much of the premium is paid out in claims?
The ideal incurred claims ratio is 75-85%. A low ratio does not bode well for policyholders and a high ratio of 100% or more shows that the insurer has had to pay out the entire premium (or more) that it collected.


Note: Numbers show the incured claims ratios

Make sure the insurer is financially sound
Insurers are required to maintain a minimum solvency ratio of 150% or 1.5-times the solvency margin. A higher ratio indicates better financial strength and the company’s ability to pay its liabilities*.


*Solvency ratio, however, should not be seen in isolation.For example, LIC’s solvency ratio is 1.58 times, but this does not mean the company faces a financial crunch. Solvency ratios as on 31 December 2018.

Note: The selected insurers are the top PSU insurers, private general insurers and standalone health insurers by retail health insurance premium collected up to December 2018. Source: insurers’ websites, Irdai Handbook of Statistics 2017-18 & General Insurance Council.