Insurers brace for huge claims due to Cyclone Amphan, eye aviation claims

Insurance companies are bracing for large claims on account of Amphan, the cyclone which ravaged West Bengal and Orissa last week. Most of the claims are expected from property, motor and crop insurance sectors.

There could be some respite for insurers with Air India not being eligible for any insurance claims over its damaged hangar at Kolkata airport. However, a private aircraft is reported to have been damaged during the cyclone.

According to sources, insurance companies so far have not received any claims from the aviation sector, including Air India.

The sector is mostly insured by the four public sector general insurance companies - United India, National, Oriental and New India Assurance.  The sector is also heavily reinsured by foreign firms.

Air India hangars were almost 50 years old and had passed the age for any insurance claims to be made, said sources.  In fact, the airline was planning to demolish those hangars by the end of this year after being warned by Kolkata Airport authorities that the structure had become weak.

Only one ATR-42 of Alliance Air was damaged in the cyclone. However, the airline had already marked the aircraft as scrap last year.

“Our two aircraft parked at a Kolkata airport were not damaged. There is some damage to the hangar. A small private aircraft that was parked in the hangar has been damaged,” an Air India official said.

However, claims from motor, property and crop insurance could be quite high as the storm hit urban conglomerates hard.

Claims have already started trickling in, even though communication is yet to be restored in large parts of West Bengal.

The storm also damaged a substantial part of the standing paddy crop, leading to high crop insurance claims.

“The overall claims are likely to be quite high. Unfortunately, the damage has been more in the southern districts, where insurance coverage is relatively dense. So far, we are not able to assess the damage as our offices could barely open.

However, we expect losses from small business establishments, apart from property and motor segments,” said Girish Radhakrishnan, CMD of United India Insurance. Till Friday, United India Insurance had already  received about 150 claims.

Atul Sahai, Chairman cum Managing Director, the New India Assurance, said till late Friday, the insurer had received close to 200 claims, mostly from property and motor insurance. "Claims are expected to start coming in after seven to eight days," said Sahai.

According to Tajinder Mukherjee, Chairman and Managing Director, National Insurance, till Friday night about 100 claims had been filed for approximately Rs 50 crore with National Insurance. “Most of the claims pertain to vehicles damaged by falling trees and properties affected by the storm and resultant waterlogging. As the network and connectivity improves in the districts we could expect the numbers to go up,” she said.

“We also have some exposure in crop insurance although a major part of the harvesting season is over. Motor, property and crop are typically the most affected portfolios in such catastrophes,” Mukherjee added.

In 2018, after floods in Kerala, insurance claims amounted to nearly Rs 1,500 crore.
 

Earlier, West Bengal Chief Minister Mamata Banerjee said that the damage due to Amphan could be more than Rs 1 trillion.