India: solvency ratio of life insurers 2022 | Statista (2024)

FAQs

What is the solvency ratio for insurance in India? ›

As per the requirements of IRDAI, insurance companies must maintain a solvency ratio of 1.5. Anything higher than this is considered a good solvency ratio. What is liquidity ratio or solvency ratio? Liquidity and Solvency are two separate parameters.

726 crore) and build a cushion, thus improving the solvency to 2.03 times on a merged basis (compared to 1.76 times as on March 31, 2022). The solvency was comfortable at 1.90 times as on December 31, 2023 (compared to the regulatory requirement of 1.50 times).

As per studies, 30 people out of 100 have a life insurance policy in India. According to a TOI article, life insurance coverage in rural India is set at a mere 8-10% and another study by Kantar reveals that coverage in urban India is 78%.

The financial risk profile of New India Assurance remains strong, supported by its healthy capitalisation and solvency ratio. On December 31, 2023, the company had healthy networth of Rs 20,754 and comfortable solvency ratio of 1.72 times.

Acceptable solvency ratios vary from industry to industry, but as a general rule of thumb, a solvency ratio of less than 20% or 30% is considered financially healthy. The lower a company's solvency ratio, the greater the probability that the company will default on its debt obligations.

**Solvency ratio 581% as at 31 March 2022 against IRDAI mandated 150%. | %95.49% of non-investigative individual claims approved in one working day for FY 2021-22. 1 day is counted from date of intimation of claim before 3 PM on a working day (excluding Non-NAV days for ULIP) at Bajaj Allianz Life offices.

The reported solvency of BAXA-LI was 1.62x at the end of March 31, 2022, above the mandated regulatory requirement of 1.5x.

What is the solvency ratio of Tata AIG health insurance? ›

In line with expectation, Tata AIG has maintained sufficient cushion in solvency margin over the regulatory stipulation. As on December 31, 2022, the company reported a solvency ratio of 1.95 times.

Our solvency ratio remains strong at 2.15, above the regulatory minimum of 1.5. Profit after tax (PAT) came in at ₹17.21 billion, up 14% y-o-y.

Over the next five years (2024‒28), we forecast that total insurance premiums will grow by 7.1% in real terms, well above the global (2.4%), emerging (5.1%) and advanced (1.7%) market averages. At this rate, India will have the fastest growing insurance sector of the G20 countries.

In terms of number of policies settled during 2022-23, Max Life Insurance has the highest claim settlement ratio of 99.51%. With a 99.39% claim settlement ratio, HDFC Life Insurance came second on the list. Aegon Life Insurance bagged the third position with a 99.37% claim settlement ratio.

In the insurance sector, the IRDAI supervises all the insurance companies and mandated to maintain a minimum solvency ratio of 150% (minimum excess assets over liabilities), termed the Required Solvency Margin.

In other words, it measures the margin of safety a company has for paying interest on its debt during a given period. The higher the ratio, the better. If the ratio falls to 1.5 or below, it may indicate that a company will have difficulty meeting the interest on its debts.

A solvency ratio of 30% is quite excellent and indicates a very healthy financial position of the company. It assures the investors and the shareholders that the company can repay their financial obligations with ease and are not cash-strapped.

The current ratio measures a company's ability to pay off its current liabilities (payable within one year) with its current assets such as cash, accounts receivable, and inventories. The higher the ratio, the better the company's liquidity position.