MUMBAI: Cost of covering property against natural catastrophes is set to rise from the financial year 2016-17, with claim intimations from the Chennai floods crossing Rs 4,500 crore. Representatives of the non-life industry met recently to take stock of industry losses and compute an increase in rates.
“In recent years, India has seen a catastrophic event every year. So pricing of catastrophic events would move up,” said Tapan Singhel, MD & CEO, Bajaj Allianz General Insurance. Insurance companies have been hit by several natural disasters in recent years. The Uttarakhand floods in 2013 were followed by Cyclone Hudhud in 2014. In 2015, non-life companies were hit by claims arising out of the Chennai floods. Total claims arising out of natural catastrophes in the last three years have crossed Rs 10,000 crore. An official with a public sector insurance company said that they would increase premium for natural catastrophe risks from roughly 15 paise per Rs 1,000 to 22 paise per Rs 1,000.
The overall impact on property insurance rates would be marginal because catastrophic risks are one component of the policy. Also, businesses that are housed in multistoreyed buildings and not exposed to flood might not go in for the add-on.
Non-life industry officials met under the aegis of the General Insurance Council. “The council only provides a platform for technical collaboration and exchanging information. Each company then takes an incremental call on pricing based on their individual experience,” said R Chandrasekaran, secretary general, General Insurance Council.
Credits ET Realty