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It is increasingly likely that the Olympic games in Tokyo will fall victim to the coronavirus, in what would almost certainly be the biggest event contingency loss ever. The economic losses will run into the tens or perhaps even hundreds of billions, with the potential cancellation of the Olympics estimated to cost the Japanese economy 0.8 percentage points of GDP, according to Nomura — and that is before calculating the cost to overseas broadcasters and their advertisers, not to mention Japan’s estimated US$13 billion investment in infrastructure. The International Olympic Committee usually has a policy cover for around US$800 million.

Many other high-profile events have already been scrapped, including the opening of Grand Prix in Melbourne this Sunday, NBA basketball in the US, Tennis Pro Tour. The governing body of European football is also considering postponing Euro 2020, which is due to take place across 12 countries during June and July.

The bad news for most businesses affected by such cancellations is that insurers are unlikely to shoulder the losses as the standard wording does not cover pandemics. Such policies generally exclude coverage for an outbreak of communicable disease which leads to an event being disrupted.

While events that are cancelled due to government mandate can get covered if communicable diseases are included in the policy, voluntary shutdowns such as the Melbourne Grand Prix are not and will likely give rise to more disputes.

The events calendar for 2020 could be a write-off — and an uninsured one at that.

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Vehicle owners will, in a pilot programme, receive messages from the Transport Department if their vehicles lack third party liability insurance or the policy has expired. The pilot will operates in some states including Karnataka, Bihar, Odisha, Andhra Pradesh and Delhi.

The Insurance Information Bureau has details of all insured vehicles whereas the central government’s Vahan database has details of all registered vehicles. The transport departments in each state can easily find out which vehicle is uninsured by matching the the data from these two sources. The messages are then sent to the mobile numbers linked to the vehicle registration number.

The pilot programme is being done in conjunction with the Indian insurance regulator IRDAI with the aim to increase compliance of the local law that mandates that each vehicle should compulsorily have third party liability.

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Fire insurance premiums have been increased by 10-50% for most types of businesses for 291 business segments since 1 January. The revision comes after GIC Re hiked reinsurance rates. When GIC Re hikes reinsurance rates, insurers which take risk cover from the former pass the increase on to their customers.

In 2019, 36 segments in eight industries were mandated to be charged market rates based on past claims experiences. This year, almost all of India Inc has been included in the premium increases and discounting is barred.

Discounting has been a common practice in classes of insurance like fire insurance, where despite higher claims in the previous year, lower premiums are charged. While this helps the incumbent insurer to retain corporate clients, hits their profitability.

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Indian insurers are under pressure in the wake of recent events involving US and Iran, with reinsurers turning wary and increasing premiums on coverage for crude oil shipments to India. Indian insurers largely depend on European companies to reinsure their risks.

However, amid the current tensions, a majority have hiked premiums and have also refused complete coverage. Though insurers too see the need to increase their charges, their customers, which are oil importers, are resisting the move.

In a maritime warning, the US said that heightened military activity and increased political tensions in the Gulf region continue to pose serious threats to commercial vessels.

Bulk drug makers have seen a significant jump in insurance premiums for fire and allied perils this year. Premiums have jumped by at least three times from previous rates.

The increase follows a directive from domestic reinsurer GIC Re in February 2019, that mandate insurers to hike fire premiums for eight sectors. Bulk drug manufacturing is one of these sectors that also include rubber goods, plastics, textiles, thermal power plants, chemicals manufacturing steel plants and freight forwarders’ godowns.

Claims data collected from the Insurance Information Bureau showed a significant rise in loss ratios in fire insurance. For some insurers, loss ratios had crossed 150%, which meant that for every INR100 collected as premium, they paid INR150 in a claim. Natural calamities have led to a rise in fire and allied perils, like lightning and explosions, etc. Chennai floods were the trigger point. There was a huge number of claims from the floods that led to losses for insurers. In addition, in previous years, insurers had depressed premium rates as they engaged in price competition.

The Indian Space Research Organisation (ISRO) is looking to buy insurance cover for a domestically launched space satellite, the first since it began launching satellites in 1975.

Two factors explain the space agency’s quest for satellite insurance. First is an unexpected setback in Project Chandrayaan-2, which cost nearly INR10bn ($139.4m), and second is the success of ISRO’s Mars mission, which brought down reinsurance rates for Indian space exploration activities.

Of nearly 75 satellites launched by ISRO, less than a quarter were insured – as the organisation to date has not seen any point in insuring domestic launches. However, while ISRO has not insured launches conducted on Indian soil, it has typically insured launches done in partnership with other countries, such as Russia and the US.

One such example is the 1982 launch of INSAT-1A, an Indian-US joint venture. Launched in 1982 via a Delta rocket, its altitude control propellant was exhausted by September of that year, leading to the abandonment of the communications satellite. ISRO lodged an insurance claim and received a payout of $12m.

New India Assurance and other state-owned insurers were typically those tapped to provide cover for these projects, with reinsurance from the international market.

Insurance companies have been barred from excluding from coverage illnesses associated with hazardous work activity, artificial life maintenance, treatment of mental illness, age-related degeneration and internal congenital diseases. The IRDAI said that age-related ailments such as cataract surgery, kneecap replacements, Alzheimer’s and Parkinson’s disease would also have to be covered

The regulator has also standardised exclusions—which means if an insurer does not want to cover epilepsy, chronic kidney diseases and HIV/AIDS—there are specific wordings to be used and a specific waiting period (30 days-1 year) after which coverage would begin.

Standardisation of health regulations will also help portability. IRDAI said, “If a person transfers from one insurer to the other — and has already completed in part some of the waiting period requirement — then the new insurer may impose only the unexpired/residual waiting period not exceeding 48 months from the date of first issuance of the policy.”

The IRDAI also said,“Every health insurance product shall cover all pre-existing diseases disclosed by the persons to be insured immediately after the expiry of the 48 months waiting period or such lower period as stipulated in the product.”

However, TPAs and brokers warn that while these moves by the IRDAI are pro-customer, they could affect pricing.

The Transport Ministry is establishing an electronic database to store drivers’ licensing data from throughout the country. The database aims to stop the issuance of multiple licences in different states. In India, over 30% of drivers have more than one vehicle licence.

In several cases, it was found that some people had secured a licence from another state after their ‘original’ licence was confiscated by the authorities. The new system would curb such practices. The move would also help insurers in detecting and dealing with errant drivers.

The Indian government has issued a notification putting into effect its decision to allow 100% foreign direct investment in insurance intermediaries. The FDI ceiling was previously 49%. Intermediaries include insurance agencies, brokers, third party administrators, surveyors, and loss assessors. The notification was issued by Department of Financial Services of the Finance Ministry on 27 August.

The decision is expected to encourage foreign brokerages buy into Indian companies and deepen the market in terms of new products and technology. Foreign brokers are already keen to expand. In March, Marsh raised its shareholding in its India joint venture to 49% from 26%, while in May, Gallagher took an undisclosed in Edelweiss Insurance Brokers. Other brokers such as Willis Towers Watson and Howden, owned by Hyperion, are also already in the market.

India is one of Asia’s key emerging markets and the long term potential in the country is clear. Fitch says,“We believe increased international involvement, particularly from developed markets, will contribute positively to the development of distribution networks, use of technology in distribution as well as bring in expertise in areas such as marketing and client-servicing. Fitch also expects the proposal, once implemented, to boost M&A in the fragmented insurance intermediary market over the medium term.”

Despite pressure to the economy, the long term prospects of India are good; around 600 million people in India are under the age of 25. There are plenty of opportunities in India as the economy becomes more sophisticated and the hundreds of millions of young people reach working age.

Three public sector insurance companies have dragged down the non-life industry into a INR440m ($6.2m) loss for the financial year ended 31March 2019 (FY2019). National, Oriental and United India reported aggregate losses of INR42bn, which is more than the collective profits of the remaining 23 companies. The reason for the poor performance of the state owned general insurance companies is their huge underwriting loss.

The insurers reported an aggregate underwriting loss of INR184.9bn for FY2019, a 47% increase over FY2018.

The government is considering a merger and a subsequent listing of National, Oriental and United India. However, due to their poor financial performance, they will require capital infusion.