Cost of cover against natural disasters may rise by 10-15%

MUMBAI: Premium rates on natural catastrophes are likely to rise by 10-15% after three years of consecutive claims from such calamities. The general insurance industry had faced claims of more than Rs. 4,700 crore from the recent Chennai floods, and in the past two years, the industry paid huge claims from J&K floods as well as the devastating effects of Cyclone Hudhud which struck in 2014.

Although the reinsurance market was soft during the December renewal, the industry is expecting rates to harden on April 1, when most corporates will renew their property and liability insurance. Reinsurance is the insurance taken by insurance companies to help lower their share of the risk. “We expect Natcat rates to harden by 10-15% in the coming renewals,“ said G Srinivasan, chairman and managing director New India Assurance.

“The industry has paid huge claims over the past three years due to natural catastrophes. Now, rates will reflect the past claims.“

The claims arising out of Chennai floods have crossed the numbers of Jammu & Kashmir and Uttarakhand floods, when there was a hit of Rs. 2,000 crore to the industry for each event.