People always think twice before investing in a private insurance company. They have a doubt whether their investment will be safe with private insurers in India or not. With globalization in the year 2000, there has been a surge of private insurance companies in the Indian economy. But even now the attitude of the investors’ is skeptical. The private insurers are relatively new in the country and do not have a past record, and thus people often doubt their credibility.
People keep wondering before investing in ANY private insurance company whether their investment is safe or not? Whether they will get back their money after maturity or not? What happens if the company winds up and leaves the country before the policy matures? Will they get their claim easily on death of the life insured or maturity of the policy? In the unfortunate event of death of the life insured, will they get the claim at all? And many more doubts.
Well, to clarify on behalf of all private insurance companies, investing with them is as safe as keeping the money with you.
Let us understand the basic reason for so:
- Since all these companies are regulated by the Insurance Regulatory and Development Authority (IRDAI) and the policies launched and issued by them are also under the guidelines of the IRDAI, there is indeed no need to be worried about the safety. The IRDAI is a very strict regulator and all insurance company operating in India has to abide by their guidelines.
- According to Section 64VA of the Insurance Act 1938 there is a Solvency Margin of Rs 150 crores that needs to be maintained by each and every insurance company. It needs to be submitted to the Reserve bank of India under the supervision of the Insurance Regulatory and Development Authority of India (IRDAI), as safety deposit money which is kept for repayment to customers in case the company declares bankruptcy before paying out the claim. Also the Solvency Margin keeps increasing as and when the insurance company increases its portfolio. Thus, even if the insurer winds up its business and decides to move out of the country, RBI can repay the customers from the security deposit money that it keeps on behalf of the insurance company.
- Also, each Insurance company is attached with a Re-Insurance company who takes up the liability of repayment to customers in case of a very large claim if the Insurer is unable to pay.
- Also if there is any dispute with any insurer, policyholders can approach the Insurance Ombudsman. The Ombudsman is a non-judicial authority which settles disputes between the policyholder and the insurer up to a certain limit and within a limited timeframe. The award passed by the Ombudsman says is binding on the insurer but not on the policyholder. He can go to the Consumer Forum or the Court of Law if the award passed by the Ombudsman is not satisfactory.
Considering the above factors, you can completely trust all private insurers in India who are under a strict regulation of the IRDAI, the insurance regulator in India which is a government of India appointed body. Hence purchasing any policy from any of the private insurers do not involve in any risks. All you need to decide what kind of policy you need and then choose the best plan which suits your and your family’s financial requirements.
