Things to look for in an insurer

Buying insurance is crucial for protecting your prized assets from any financial loss. Since insurance is essentially a contract between the policyholder and the insurance company, buyers must do the due diligence of the insurer, not just the product.

Buyers should pay close attention to grievance ratio, coverage strength and financial muscle of the insurer, before taking any decision. Let us find out more about how they can do this.

Grievance ratio: As a policyholder, you want a seamless experience during claims and also other times. If you are not happy, you can lodge complaints, but this route may take a lot of time for resolution.

The grievance ratio is a handy metric which tells you about the number of complaints received by the insurer to premium collected. One should opt for insurers with low grievance ratio to premium.

The larger an insurer, its premium collection may increase because of the ability to sell policies.

However, a consequent rise in complaints shows that dissatisfaction amongst consumers. Ideally, you should consider insurers with a grievance ratio to premium of less than 0.0015. Such low a ratio shows the insurance company is able to service customers’ needs proactively.

Coverage strength: Unlike pure life insurance when the insured and the insurer don’t speak during claims, service coverage becomes doubly important when it comes to non-life covers. General insurance consumers have a variety of requirements and only an insurer with proper coverage strength can step in to help every time with the highest level of service quality.

Consider an insurance company which has an adequate number of offices across the country and a high number of intermediaries working for it.

Besides online and tele-calling services, the insurer must be accessible in channels that you want and keeps customers as a focal point in all operations.

Financial muscle: An insurance company pays consumer claims based on its own financial assets. This is why adequate care should be taken in selecting an insurer with sufficient financial muscle.

What insurance buyers should look for are stable and robust investment returns and a strong capital buffer i.e. solvency ratio.

The latter metric measures the company’s ability to pay off its claims if all of them materialise at once.

HONOURING CLAIMS

• You should consider insurers with a grievance ratio to premium of less than 0.0015
   
• Consider a company which has an adequate number of offices across the country

The writer is ED & CEO of Reliance General Insurance