Cos may have to pay more for fire and engineering cover

Mumbai: Businesses, industrial units and commercial establishments may need to pay higher premiums for fire and engineering insurance starting January due to rising claims from catastrophic events, prompting insurers and reinsurers to increase rates. The increase in premiums is driven by shrinking profitability, inadequate capital, and the withdrawal of reinsurance support, industry sources said.

Claims from the catastrophes such as Vijayawada and Vadodara floods have prompted reinsurers to demand revised pricing models and stricter underwriting practices, industry sources said. Fire and engineering insurance policies are typically bought by businesses, industrial units, and property owners to protect against risks like fire damage, machinery breakdown, and engineering-related perils.

From January 1, Industrial All Risk (IAR) policies, a comprehensive fra-mework for industrial property and operations, will follow stricter pricing rules.