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February 5, 2016
The insurance industry has been considering increasing premiums for natural catastrophe cover by 10-20%, following several natural disasters such as floods that have struck the country in the past two years.
The hikes are likely to take effect from 1 April, reported the Business Standard. Insurance companies have taken a hit of INR48 billion (US$710 million) due to claims arising from the recent floods that hit Chennai and other parts of southern India. In 2013, floods and landslides in Uttarakhand in northern India led to losses of INR30 billion for insurance companies. Insurers have seen an influx of claims on corporate all-risk policies, which include business interruption coverage since several factories and offices were submerged for more than three days. In terms of numbers, motor insurance topped the list of claims, as several cars and motorcycles were damaged in the floods.
On Monday, Mr T S Vijayan, the Chairman of the insurance regulator IRDAI, said on the sidelines of a conference that there is a need for price corrections in the general insurance space, especially in disaster cover. He told reporters: “Some revision in pricing is required especially in areas like insurance for natural catastrophes.” “The general insurance industry on a whole is not making a lot of money. It requires some base corrections to premium rates, especially in a case like the recent heavy rains in Chennai, which resulted in huge losses,” Mr Vijayan said.