Private Insurance And Public Insurance Companies

private vs public insurance company

As we all know that about 70% of India’s total population is below middle-class families and are only able to earn for spending their livelihood. So, not everyone can afford an insurance plan for their financial security. To overcome this problem our government has announced some schemes for the weaker section of the society. Under these schemes, people have to pay a small amount yearly and take advantage of some features provided by the government. 

 Below are some public insurance company schemes and their benefits:

  • Life Insurance Corporation of India

LIC lies among the topmost insurance companies in India incorporated in 1956. It is governed by the insurance act 1938. There are so many offices of LIC located in every state and zone of India and everyone is well aware of this company. This company only deals with life insurance and offers the best financial protection at low annual premiums.

  • General Insurance Corporation of India

GIC was incorporated on 22 November 1972 and owned by the state government. Its headquarters are based in Mumbai (India) and 3 liaison offices are based in Chennai, Delhi, and Kolkata. After its inception, 4 companies became its subsidiaries to control and operate the general insurance in India.

  • The New India Assurance Company

It was founded on 23 July 1919 and its headquarter is based in Mumbai, Maharashtra. It is a well-established insurance company with excellent financial strength and has 2329 branches in India. Its network is also distributed internationally among 28 offices situated abroad. There are a total of 17330 employees working with NIA including all low-grade workers.

  • The Oriental Insurance Company Limited

This company was incorporated in 1947 and its headquarter is based in New Delhi. This company offers more than 170 types of insurance products including all major and minor facilities catering to all segments of general insurance. There are a total of 1800 branches activated across the country and also have some regional branches in foreign countries. There are approximately 15000 employees working with Oriental insurance companies. On 2nd February 2018 the government of India announced the merger of Oriental Insurance with a National Insurance Company and United India Insurance Company.

  • United India Insurance Company Limited

UIIC was incorporated on 18th February 1938 and nationalized in 1972. It is completely owned by the government of India and its headquarter is based in Chennai. After nationalization, 12 Insurance Companies of India, 4 Cooperative Insurance Societies and 5 Foreign Insurers with Indian operations have been merged with UIIC to form a company. It provides general insurance for majorly all segments of the business. UIIC has a total of 2248 offices including all service hubs, regional, branch and divisional offices spread all over India.

  • National Insurance Company Limited

NICL was incorporated in 1906 and nationalized in 1972, since then it has been owned by the state government. There are 11 Indian and 21 foreign companies merged under it after nationalization. Its headquarters is based in Kolkata. NICL provides several public policies like auto insurance, medical insurance, property insurance, and accident insurance. Apart from these, it will also provide insurance for business and agriculture under rural insurance policies. It also provided industrial and commercial insurance to cope with the loss in the construction business, recovering the damage in transportation.

  • Agriculture Insurance Company of India Limited

This insurance company was incorporated on 20 Dec 2002 with an authorized capital of INR 1500 crores to cater to the needs of farmers involved in agricultural activities. It will provide financial support to the families of farmers in case of crop failure due to natural calamities, disease or pests

 They will also help farmers to use modern and progressive techniques to stabilize the income from the farmland particularly in the year of the disaster. It will cover the loss of cyclones, hailstorms, hurricanes, landslides, floods, drought, vermin and other nature dependent calamities. 

Private Insurance Company

Apart from these public sector companies, there are 57 private insurance companies working in India and dealing with the financial loss of their customers. In these 57 companies, 24 are engaged in life insurance and rest 33 are engaged in non-life insurance. These companies are also trustworthy as they are regulated and monitored by IRDA.

Getting a license for an insurance company and establishing it in India is a tough task as it needs initially INR 100 crore for license registration. So, if any company has set its root in the insurance market, then there is no doubt that they are having massive financial strength with them.

If you are thinking that what happens if the company suddenly gets shut down taking all your hard-earned money, then you must know about the merger clause. Under the merger clause, if any insurance company wants to wind up their business then they have to merge their business with another company and the other company will run the business further. So, not an insurance company can suddenly wind up their business and leave their customers in pain.

Further, choosing between a private insurance company and a public insurance company is really a difficult task. As different companies are providing their best for the specific insurance product and have their edge over others.

We have provided some comparisons to get a rough idea for the benefits provided in health insurance for both public and private insurance companies.

Private Insurance Company vs Public Insurance Company 

  • Public sector insurance companies were established years ago and since then they are performing well whereas private sector companies came into existence in 2000 and are now performing well. 
  • Public insurance companies are regulated by the government of India or state government whereas private insurance is monitored by IRDA.
  • Public insurance companies come under GIPSA Hence able to provide huge discounted rates whereas private insurance companies don’t provide such discounts. 
  • Public health insurance has a cap and comes with an upper limit for expenses whereas private health insurance companies majorly offer complete coverage on all medical expenses.
  • The private sector provides restoration and NCB benefits on health insurance whereas the public sector doesn’t provide such benefits.
  • The private sector provides a high sum insured to cover all diseases and expenses whereas the public sector provides a specific amount of sum insured for all.
  • The private sector provides facilities to increase the sum insured by giving extra amounts whereas the public sector doesn’t provide ants such provision for further addition.
  • With public health insurance, you can negotiate for expensive surgeries whereas private insurance companies will not provide any negotiation with surgery cost.