Spike in demand for home insurance
Phones are ringing off the hook at insurance companies and page views have surged at websites offering policies to cover homes and their contents. The earthquake that tore through Nepal on April 25, killing thousands and reducing scores of buildings to rubble has led to a surge in enquiries about home insurance policies in India.
Such policies are of two types -one covers the structure and construction costs in the event of damage to the property due to natural calamities while the other insures belongings and house hold contents.
“There is a spike in demand and this will stay for a short time,“ said Tapan Singhel, managing director and CEO of Bajaj Allianz General Insurance. “We have seen a similar spurt in the past -during the Jammu & Kashmir floods, the Uttarakhand floods and the Sikkim earthquake.“
As with all forms of insurance in India, home cover is also sparse. The number of insured homes is estimated at 20 lakh with annual premiums adding up to Rs. 2,500 crore. At the time of the 2011 census, In dia had 33 crore homes, of which only half are of `pukka’ construction, or permanent in nature There is huge potential in the segment, with average premiums . 3 lakh seen going up to as much as ` according to industry estimates.
“Suddenly there is a spike in en quires, but conversion into a sale is hampered due to lack of wide spread distribution,“ said Sanjay Datta, head of underwriting at IC ICI Lombard General Insurance.
Due to lack of awareness, companies are unable to capture demand. That may change following the devastation in Nepal. Industry executives said that those residing in seismic zones need to buy home insurance to protect themselves.
Policies pay for damage to property and contents due to natural or man-made calamities, including earthquakes. Rates vary from 70 . 1,000, de . 1 per cover of ` paise to ` pending on the area and the frequency. Many banks and housing finance companies insulate themselves from such possible risks by making home insurance mandatory for mortgage customers. A standard clause in most home loan contracts is that the mortgaged house should be insured against natural calamities.
Source: Economic Times