Benchmarking Financial Resilience: A Composite Evaluation of Indian Private Non-Life Insurers using the WAR Method and IRDAI Framework
Author : Ashirbani Bardhan
Abstract :
The Indian private non-life insurance sector has expanded rapidly in the post-liberalisation period, leading to intensified competition, technological innovation, and increased regulatory focus on financial stability. In this regard, the current research intends to measure financial soundness of the non-life Indian based private non-life insurance companies based on their composite and regulator-consistent assessment structure. The study will analyse secondary time-series data of 24 private non-life insurance companies between 2012 and 2023, but will not include Navi General Insurance Limited because of the lack of historical data. Performance assessment is done using sixteen financial ratios as prescribed in the IRDAI Master Circular, which depicts growth, underwriting efficiency, profitability, liquidity, expense management and solvency. To stabilise short-term volatility mean values are calculated, subsequently individual ratio-wise ranking are assigned and Weighted Average Rank (WAR) method was applied to derive a unified composite score for each insurer. The empirical outcome indicate that those insurers who exhibit balanced results on regulatory dimensions end up with better resilience classification, and Shriram General Insurance, Bajaj Allianz General Insurance, and ICICI Lombard General Insurance are the best in their performance. Conversely, the low-ranking insurers (such as Zuno and Acko General insurance company) illustrated a relative disequilibrium in the selection of the financial parameters, making it necessary to enhance capital sufficiency and operation discipline. The study contributes to the literature on the insurance performance by including regulation ratios by using the composite benchmarking model and understanding of regulators, insurers, investors and policyholders in improving the stability within the industry and prudent decision making.
Keywords :
Weighted Average Rank (WAR), IRDAI Framework, Financial Resilience, Composite Performance Evaluation.
