The growing concerns over the increasing natural calamities in the east coast of India is leading the general insurance players to look at increasing premium rates for properties, commercial establishments, factories and others which are located in the vulnerable areas, according to industry sources. In the last two or three years, these insurers had to field claims worth around Rs 9,000 crore due to natural calamities in this region.
The calamities include cyclone at Vishakapatnam (general insurance claims of around Rs 2,500 crore) two years back, cyclone at Orissa (claims of around Rs 500 crore), flood in Chennai during December 2015 (claims of around Rs 5,000 crore) and cyclone in December 2016 (initial claims of around Rs 1,000 crore) in Chennai.
The New India Assurance Co Ltd’s Chairman and Managing Director G Srinivasan said, “We are a bit concerned as these locations are now seeing the natural calamity on a yearly basis. East Coast has become vulenrable especially cities like Vizag and Chennai”.
He added, insurers may have to think of charging appropriate premiums for the properties located in the vulnerable areas of these locations. It will also have to look into the risks much more closely. For instance, the locations which were affected in the floods last year, was also affected during the cyclone this year, in Chennai. The risk inspection would be important and the premium would be based on this risk assessment.
“There is going to be some pressure on the rate in the coming year,” he added. Locations which are getting hit frequently and where something is inherently wrong, will be identified.
“We also end up paying higher cost to the re-insurer, this will lead to increase in the premium for the customers in these vulnerable areas,” said Srinivasan.
New India Assurance, one of the top public sector insurers in the region, received around 350 claims worth around Rs 50 crore so far and is expected to receive more claims in the coming days.
Chennai-based United India Insurance said that so far around 250 claims were reported to the company, post the cyclone which hit Chennai last week, with a claim of around Rs 100 crore. The company also expects more claims to come up this week.
An official from the company added that the reinsurance market will be hard for the general insurers, which inturn will lead to increase in prices at the domestic market in these vulnerable area.
Pankaj Verma, head of claims at SBI General Insurance echoed similar view on chances of premium rates going high in the east coast of India stating that it will have bearing on the rates, which has to be passed on to the consumers.
Like other insurers, SBI General is also evaluating methods to address the situation. It has so far received claims worth Rs 20 crore.
It was SMEs who were facing the heat most, during such calamities. To help them, insurers have started relaxing some documents and started portion of the claims immediately so that they can make their units up and running.
Srinivasan and Verma have confirmed that both their companies started doing this for the first time. In SBI, SMEs units gets around 50 per cent of their claim upfront so that they can start the units immediately ends
Source: Business Standard
Date: 18th December, 2016