HOW TO SELECT AN INSURANCE COMPANY?

There are some points that can help you to weigh a company before you associate yourself with an insurance company.

1. Financial track record of the insurance company
The most important factor of an insurance company is the financial well-being that can attract you to take an insurance policy from a particular company. In the Indian context where an experienced foreign player is involved, the financial performance of the foreign partner is equally important. One can judge the company's financial performance on the basis of the claim amount settled, frequency of claims, rating given by an independent international rating agency such as Standard & Poor.

2. Financial underwriting norms
Financial underwriting means to assess the extent to which an individual should be insured in monetary terms. Generally, an individual should be insured sufficiently enough so that he can continue to lead a lifestyle post-retirement as he was leading before retirement. With this perspective, he should probably look at getting himself insured up to 10-15 times his annual salary. So, ideally you should stick with an insurer that follows prudent financial underwriting norms. Many insurance companies in their enthusiasm to expand their policy base may undertake to insure a larger quantum of risk than necessary. In this way, they overexpose themselves for enhancing the risk levels. Insurance being a matter of sharing risk, financial underwriting becomes an important factor to determine the future liabilities of the companies.

3. Insurance agent
The insurance agent of the insurance company is the link between the insurance company and the individual applicant. Often it is observed that applicants freely discuss various issues with the agent including medical ones such as a heart problem running in the family or hereditary diabetic problem. Some agents are also co-operating by not revealing these sensitive details to the insurance company. An applicant must understand that the agent is putting the premiums contributed by other applicants at risk by not disclosing your true medical condition. He could well cooperate with another applicant in future by concealing his true medical history, and put at risk your premium. So, when you apply for an insurance policy you ought to consider these things.

4. Management's pedigree
Another factor that coincides with financial stability is the management of the insurance company. Financial stability is generally a direct consequence of good management. As in other industries, life insurance also thrives on good management and if anything, given the sensitive nature of the industry, it needs a solid management at the helm more than the others. In the Indian context, both partners should have a lot of integrity and experience in the financial sector. If the Indian partner already has a history in a financial field like housing finance and banking and also has an AAA rating to boot, that should tell you something about the company's proficiency.

If you are planning to purchase a life insurance policy, you may want to weigh these factors. You must understand that purchasing a life insurance policy needs a different approach than investing in a bond or a fixed deposit. Life insurance involves a longer commitment and a larger amount that will you or your survivors at a time when they need it the most. So don't get carried away by what your agent tells you, do a little homework on your own for a change.

‘Cheap’ safe costs jewellers Rs 13 lakh insurance claim

State panel dismisses robbed jewellers' claim, saying they had used a locally made safe to store jewellery and had not ensured security of their shop

 If you think the liability of your insured house or shop rests solely with the insurance company, you could be mistaken. The State Consumer Disputes Redressal Commission recently dismissed a Rs 13 lakh insurance claim complaint of a Bandra jewellery shop, observing that the jewellers failed to take basic safety precautions for their burgled shop by storing jewellery in a locallymade safe and leaving its keys inside the shop.
    V R Jewellers at Bandra's Hill Road had taken an Oriental Insurance Company policy for their shop for the period January 1996 to January 1997. But on October 30, 1996, robbers broke into the shop, found the keys to the safe, after ransacking the drawers, and made off with jewellery worth Rs 13 lakh. The jewellers filed their claim with the insurance company, while their complaint with the police proved futile.
    After investigations, the insurance company's surveyor rejected the jewellers' claim on two grounds —one that the original keys to the safe, which the robbers used to open the safe and steal the ornaments, were lying in the shop itself, and second that the jewellers had committed breach of warranty by not securing the ornaments in a standard safe vault. Upset by the company's rejection, the jewellers moved the consumer court in June 1999 claiming Rs 11.5 lakh from the company alleging deficiency in service, and interest on Rs 10 lakh from February 1997.
    In defence, the company relied on their surveyor's report before the court. They contended that the jewellers were robbed only due to negligence on their own part. The court observed from case records that the jewellers had mentioned to the insurance company that their safe was locally made and cost them Rs 18,000 in 1986. But in the insurance company's proposal form, it is mentioned that the "safe has to be of standard make otherwise cover would not operate". The court thus held that the jewellers should have ideally bought a standard safe.
    The insurance company's surveyor had concluded that one of the shop's window was fixed with designed grill with sliding glass fitted from inside. "There was enough width between the wall and the grille so as to allow anyone to damage the grille and enter the shop," the surveyor had written, highlighting the shop's susceptibility to a break-in. Relying on this, the court noted, "The situation of windows was such that any person could enter the shop easily to commit robbery." The court also held that the jewellers made do only with an ordinary watchman, "If ornaments worth Rs 13 lakh were kept in the shop, then it was their duty to engage a watchman at least at night to protect its shop from thieves and burglars."
    Taking note of the evidence, the court found the insurance company's rejection of claim 'justifiable'. Manilal Bheda, partner of V R Jewellers, said, "We will appeal the verdict because after waiting for our claim for over a decade, we cannot be brushed off by blaming the robbery on us. While taking insurance, we had shown the safe to officials and said that this is all we have for security, to which they had agreed then."

Owners of V R Jewellers in Bandra have said that they will appeal against the verdict