re: What is 'Solvency Rate' among car insurance companies? Higher the better, but irrelevant.
Solvency ratio tells you about the ability of insurance company to settle claims, if the company receives a large number of claims all at once.
Eg: During Covid, health insurance companies were flooded with claims. With respect to car insurance, something like that will happen only in case of floods, earthquake, war etc.
The reason why it is mostly irrelevant is because IRDA would have set minimum limits. Also, there is something called REINSURANCE. Insurance companies would have themselves gone to a large company called "reinsurance company" and insured their entire portfolio. For this, the insurance company has to pay a premium (just like how we have to pay a premium)
So, if a car insurance company suddenly gets claims for Rs. 100 crores because of a natural calamity, this reinsurance company will payup a big percentage of the claim.
The largest resinsurance company in India is GICRE https://www.gicre.in/en/ |