Best insurer private or public ?
In year 1973, four public sector co’s namely Oriental insurance, United India insurance, New India assurance & National insurance co. came into existence by merging 107 pvt insurers & they ruled the insurance market for years. But after year 2000 the insurance sector was again re-opened for the private sector & now there are 21 general insurance co’s & 7 stand alone health insurance co’s of private sector.
After starting operations in the year 2000 the private sector kept gaining ground & public sector kept loosing the market share with each passing year. But private VS public sector insurance is always the issue of debate. At present, the pvt. Sector insurance companies are having around 56% of market share of gross direct premium in India whereas public sector insurers stands at about 44% only.
Now question arises every now & then which is best-Pvt. Sector insurer or the public sector insurer. To start with the pvt sector, they have many qualities. They are fast in claim processing, with digital support at every level. They have lots of products to offer & flexibility as per the consumer requirement. The best thing the private sector insurer claim to provide is 24X7 customer service through toll free numbers & call centers even on holidays.. They also provide on-line support for buying new policies, renewals & claims.
The public sector is rightly ridiculed for inefficiency & rigidity weather in policy sale, customer support & claim processing. They are rude non transparent in dealings. They also don’t have any innovative products to offer. Have lesser working days causing delay & irritation for the client. Little bit of corruption is also alleged to be there.
So from above it appears that private sector has all the qualities in the world & public sector is good for nothing.
Now let’s discuss the nitty gritty of the insurance business. In lay man’s language, as in every commercial organization there are two main verticals in insurance company, one is sale & distribution to procure business i.e to collect money by selling the insurance policies & other is distribute money in shape of payment of claims to the insuring public..
And if we check the out standard motor & health policies the cost charged by the public sector companies is always on lesser side & are cheaper than the Pvt. Sector.. Now come to the main concern of the consumer i.e. the payment of claim amount in case of any miss happening. Here also the yearly data show that claims paid by the public sector are always on higher side than the amount paid by the private sector. So it is concluded that public sector insurers charge less in shape of the policy premium cost & pay more in shape of claim to the consumer while the pvt sector insurers’s policy cost is little higher but claim amount disbursed is always on lower side.
To substantiate the above facts & settle the issue of private VS public sector insurance, the consumer needs to understand the term incurred claim ratio. The incurred ratio is % of premium collected to the claim paid. For example if the premium collected is Rs. 100000/- & claim paid amount is Rs.90000/-
claim paid 90000
Incurred claim ratio = —————————— x 100 = ————— x 100 = 90%
Premium collected 100000
So 90% claim ratio means that whatever amount they collected they paid 90% of the same. Or in other words for every Rs. 100 collection, the claim paid back was Rs. 90 with surplus of Rs. 10 for operating expanses.
So higher the claim ratio, good for the consumer. Now you can go through the incurred claim data of year 2016-17 & 2017-18 of the private & public sector insurance companies.
Best Private insurance companies-ICR wise list 2017-18
|PVt. Sector Insurers 2017-18||NET WRITTEN PREMIUM||NET INCURRED CLAIMS||% ICR|
|Edelweiss General Insurance Co.Ltd.||0.18||0||1.09|
|DHFL General Insurance Co.Ltd.||90.47||1.82||2.02|
|Go Digit General Insurance Ltd.||75.44||7.01||9.3|
|Acko General Insurance Limited||0.36||0.1||27.86|
|Universal Sompo General Insurance Co. Ltd.||1376.36||674.03||48.97|
|Kotak Mahindra General Insurance Co. Ltd.||162.94||83.03||50.96|
|Liberty Videocon General Insurance Co. Ltd.||699.85||403.09||57.6|
|Bajaj Allianz General Insurance Co. Ltd.||6732.54||4042.57||60.05|
|Tata AIG General Insurance Co. Ltd.||3933.02||2366.07||60.16|
|Raheja QBE General Insurance Co. Ltd.||75.95||46.02||60.6|
|Future Generali India Insurance Co. Ltd.||1511.08||969.35||64.15|
|Cholamandalam MS General Insurance Co. Ltd.||3191.26||2048.36||64.19|
|HDFC ERGO General Insurance Co. Ltd.||3455.48||2226.68||64.44|
|ICICI Lombard General Insurance Co. Ltd.||7844.76||5314.72||67.75|
|IFFCO Tokio General Insurance Co. Ltd.||3653.4||2682.71||73.43|
|Magma HDI General Insurance Co. Ltd.||375.61||277.42||73.86|
|SBI General Insurance Co. Ltd.||1727||1316.45||76.23|
|Reliance General Insurance Co. Ltd.||3163.55||2419.14||76.47|
|Royal Sundaram Alliance Insurance Co. Ltd.||2032.09||1560.37||76.79|
|Bharti Axa General Insurance Co. Ltd.||1268.33||1006.73||79.37|
|Shriram General Insurance Co. Ltd.||1977.15||1739||87.95|
|Total for private sector insurer||43346.8||29184.7||67.33|
Best Public insurance companies-ICR wise list 2017-18
|Public Sector Insurers 2017-18||NET PREMIUM WRITTEN In cr||NET INCURRED CLAIMS in cr||ICR %|
|New India Assurance Co. Ltd||20956.35||16896.47||80.63|
|Oriental Insurance Co. Ltd||10028.23||8221.21||81.98|
|United India Insurance Co. Ltd||12390.47||12137.81||97.96|
|National Insurance Co. Ltd||11465.01||12870.68||112.26|
|Total for public sector||54840.06||50126.17||91.4|
Best Private insurance companies-ICR wise list 2018-19
|Pvt. Sector Insurers 2018-19||NET PREMIUM WRITTEN||CLAIMS INCURRED (NET)||% ICR|
|DHFL General Insurance Co.Ltd.||129.09||30.77||23.83|
|Acko General Insurance Limited||98.25||28.61||29.12|
|Go Digit General Insurance Ltd.||955.37||394.11||41.25|
|Edelweiss General Insurance Co.Ltd.||73.57||35.31||47.99|
|Kotak Mahindra General Insurance Co. Ltd.||267.15||134.32||50.28|
|Magma HDI General Insurance Co. Ltd.||516.93||271.69||52.56|
|Liberty Videocon General Insurance Co. Ltd.||990.39||591.05||59.68|
|Bajaj Allianz General Insurance Co. Ltd.||7774.46||4810.41||61.87|
|Future Generali India Insurance Co. Ltd.||1721.46||1083.05||62.91|
|Shriram General Insurance Co. Ltd.||2180.08||1406.32||64.51|
|Universal Sompo General Insurance Co. Ltd.||1347.83||879.67||65.27|
|ICICI Lombard General Insurance Co. Ltd.||9538.56||6308.12||66.13|
|HDFC ERGO General Insurance Co. Ltd.||4372.79||2909.18||66.53|
|SBI General Insurance Co. Ltd.||2558.21||1720.57||67.26|
|Cholamandalam MS General Insurance Co. Ltd.||3352.32||2335.5||69.67|
|Bharti Axa General Insurance Co. Ltd.||1516.38||1076.68||71|
|Tata AIG General Insurance Co. Ltd.||5047.02||3586.37||71.06|
|Raheja QBE General Insurance Co. Ltd.||105.11||74.78||71.15|
|Reliance General Insurance Co. Ltd.||3691.47||3031.3||82.12|
|Royal Sundaram Alliance Insurance Co. Ltd.||2211||1854.85||83.89|
|IFFCO Tokio General Insurance Co. Ltd.||4187.63||3558.22||84.97|
|Stand Alone Health Insurers||8914.3||4750.43||53.29|
|Total for the private sector insurer||61549.36||40871.31||66.4|
Best Public insurance companies-ICR wise list 2018-19
|Public Sector Insurers 2018-19||NET PREMIUM WRITTEN (In crore)||NET CLAIMS INCURRED (in crores)||ICR %|
|New India Assurance Co. Ltd||22120.86||20496.7||92.66|
|Oriental Insurance Co. Ltd||10845.39||11248.08||103.71|
|United India Insurance Co. Ltd||13792.46||14336.09||103.94|
|National Insurance Co. Ltd||9650.61||11434.02||118.48|
|Total for the public sector insurer||56409.31||57514.9||101.95|
From above data for the year 2018-19, it is visible the pvt sector insurers collected Rs.61549 Cr. & in shape of premium & paid Rs. 40871 Cr in shape of claim paid. Which means for every Rs.100 collected they paid Rs.66 retaining Rs. 34 whereas public sector insurers collected Rs.56409 cr as premium & paid Rs.57514 Cr as claims w meaning for every Rs. 100 collected they paid Rs.101 thus loosing Rs.1. So the insuring public got Rs. 35% more than the private sector payments.
The reason is simple, if one is pvt. Business man, he has come to the market to earn some profit. So the motive behind all the sweet talk & promise of prompt claim service is to keep the payout on the lower side & pay as little as possible.
in view of the industry experts 70 to 80 percent of claim ratio maintains the fine balance between income & out go of an insurance company. As very low claim ratio of the companies attracts the regulatory concerns & but at the same time claim ratio above 80% is not good for the health of the insurers, But from insured’s point of view, the public sector companies with high claim ratios are much more attractive & capable to fulfill their claim obligations.