Insurers face a Rs 900 crore payout for Jammu and Kashmir flood claims

Mumbai: Insurance companies are likely to take a hit of Rs 800-900 crore from the worst floods in Jammu & Kashmir in nearly six decades that have devastated the state and crippled the economy, raising the spectre of mounting losses under motor, household and shopkeeper policies.

This is just an initial estimate, said a CEO of a non-life insurance company on condition of anonymity, adding that insurers were trying to establish communication links to assess the losses in the state where incessant rains have claimed 200 lives in the valley over the past week.

Public sector insurers Oriental Insurance, New India Assurance, National Insurance and United India have scheduled a meeting on Wednesday to chart out a plan to assess the losses.

“We are likely to see a claim of Rs 50 crore from the floodravaged state,” said Tapan Singhel, managing director and CEO of Bajaj General Insurance Company. “This will mainly come from policies sold to shopkeepers, motor insurance and some industries.”

A New India Assurance executive said financial institutions, agencies and banks have taken insurance against the loans given to individuals for houses, motor vehicles and shops.

“We are waiting for the communication link to be restored. Shops have started reporting claims. We expect claim to come from individuals for house insurance, motor insurance and shopkeepers’ insurance,” he said, requesting not to be named.

Life Insurance Corporation of India alone has provided a cover to 12.7 lakh people in the state for a total sum assured of Rs 16,543 crore. Till September 13, the corporation had not received any intimation for a claim. The Insurance Regulatory and Development Authority has asked life insurance companies to settle claims quickly.

Less than 30 claims each were reported from flood-hit Uttarakhand in 2013 and Mumbai in 2006, suggesting meagre insurance penetration. Claims from Uttarakhand floods amounted to Rs 1,500 crore.