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NAT Cat premium rates to increase wef 1 April

March 22, 2016

The cost of insuring property against natural catastrophes is set to rise from the financial year beginning on 1 April 2016 with claims from last year’s Chennai floods crossing INR45 billion (US$673 million)

“In recent years, India has seen a catastrophic event every year on a regular basis. So the pricing of catastrophic events would move up,” said Mr Tapan Singhel, MD & CEO, Bajaj Allianz General Insurance, told reported the Times of India.In 2013, there were severe floods in Uttarakhand in northern India, followed by Cyclone Hudhud in 2014. The Chennai floods in 2015 hit in the last two months of the year. Total claims from natural catastrophes in the last three years have crossed INR100 billion.

The bulk of the Chennai flood claims will be recovered from reinsurance treaties. The net impact on the balance sheet of Indian insurers would be around INR7 billion, officials said. The overall impact on property insurance rates as a result of the proposed increase in premiums for NAT Cat cover would be marginal because catastrophic risks are generally an add-on cover in fire insurance. The add-ons are the “storm, tempest, flood and inundation” cover and a separate earthquake cover.

Representatives of the non-life industry met recently under the aegis of the General Insurance Council to take stock of industry losses and compute an increase in rates. However, Mr R Chandrasekaran, Secretary General, General Insurance Council, clarified: “The Council only provides a platform for technical collaboration and information exchange. Each company then takes an incremental call on pricing based on their individual experience.”

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