Japan earthquake and nuclear catastrophe leaves a Rs 400 crore hole in GIC books

MUMBAI: The General Insurance Corporation of India (GIC), the designated national reinsurer, has seen a claim of Rs 400 crore from the catastrophe in Japan. Japan was hit by an earthquake on March 11 this year. This was followed by tsunami and fire outbreak that lasted for close to a week. The entire catastrophe has taken the total economic loss to the extent of $409 billion. “We have seen a loss to the extent of Rs 400 crore from the crisis in Japan,” said GIC chairman and managing director Yogesh Lohiya. He said the total economic loss was estimated at around $409 billion.

The insured loss, however, is estimated to be around $40 billion, he added. GIC had mainly reinsured the property risks for catastrophic events. Mr Lohiya said that the entire loss to commercial properties is borne by insurance companies against 80% of the damage to the residential properties absorbed by the government in Japan, while the remaining 20% is with insurance companies. The recent catastrophic events such as floods in Australia, quakes in New Zealand and tsunami in Japan had led to reinsurers to raise rates.

Though India has not suffered any major losses in the last couple of years, the market saw a marginal hardening of 5% during the April 1 renewals. For instance, New Zealand has seen an increase of over 300% in premium rates on catastrophic risks. Mr Lohiya said: “Indian corporates have seen a marginal increase of 5% during the April renewal.” Similarly, the New Zealand quake loss is estimated at around $12 billion.

Since the catastrophe covers are negotiated with their reinsurers in March, there was an impact on the rates. Now the rates have moved further. The Federation of Afro-Asian Insurers and Re-insurers has mandated GIC to set up a pool to reinsure risks arising out of natural calamities in Asia and Africa. There are around 200 members from Asia and Africa. However, Mr Lohiya said there was not much progress on the pool.