Are Private Sector Insurers as Trustworthy as Public Sector Insurers?

PRIVATE AND PUBLIC SECTOR INSURANCES

We Indians think at least twice before purchasing insurance from a private company. We fear insuring our risks with a private insurer and select public insurer with blind trust.

But what will you do if Private Insurers provide better policy plan than trusted public sector insurers?

Today, private insurers are emerging in the Indian market rapidly and provide best suit services to the customers with trusted services. The reasons behind being trusted of private insurers are:

Are Private Sector Insurers as Trustworthy as Public Sector Insurers?

1)   All private and public sector insurance companies are regulated by the IRDA

All the insurance companies operating in India are organized by Insurance Regulatory and Development Authority of India (IRDA). 

So all the insurance companies (Private and Public Sector) are followed IRDA guidelines.

2)   All the insurers have the IRDA guideline to start a company, without which company can’t run

IRDA has set a fixed amount to set up a company. To start company, an insurer has to deposit Rs. 100 crore with IRDA. Such big amount makes well-reputed companies to enter in this field. 

This insures that all the companies are trustworthy. The amount of Rs. 100 crore can vary now.

List of IRDA Approved Life Insurance Companies in India

3)   All private and public insurers must sustain a creditworthiness side (Solvency Margin)

Each insurance company has to maintain Solvency Margin (the excess expanse of resources that an insurer must retain over its liabilities). This is because if an insurer’s liability rises suddenly; the insurer will have sufficient assets to pay off this sudden rise.

 In case, even if the insurer can get bankrupted, claims can be paid off by this insurer. Also, if the insurer is not able to retain this solvency margin, the company will enable to pay Reserve Bank of India (RBI) to reimburse the affected customers.

For example: For each Rs. 10 insured, insurer has to maintain Rs. 15

4)   Companies can’t close because of the Merger Clause

IRDA has a strict guideline for the insurance company. According to the Merger Clause, a company cannot shut down sustainably. 

The company has to merge with another company. The insurance company can’t faith to run away leaving its customers in the trouble.

These above mentioned factors indicate that insurer whether private or public with the finest policy will not make off with your money. The IRDA will insure this.

However, if you have faced any kind of issues (with public or private insurer), you can complaint to consumer forums, courts or insurance regulatory.