Gujarat floods to hit insurers hard

The floods in Gujarat are set to hit the general insurance industry hard as most of the big projects, coming under mega policies covering loss of profit due to fire, machinery breakdown, closure of factory or loss of machinery, have been affected by the floods.

At the retail level, losses are expected on motor and home policies as Surat alone has a population of 35 lakh. Since there is no reinsurance available for motor policies, insurers will have to take the hit.

Oriental Insurance has covered major plants of National Thermal Power Corporation, Reliance Industries Ltd and ONGC. Says M Ramadoss, CMD of Oriental Insurance company, "It's too early to comment on the losses."

According to Sreekumar, chief regional manager of United India Insurance company, Ahmedabad, the losses will be severe in Surat as it is under nine-feet water.

Speaking to Business Standard, RK Attri, chief regional manager, New India Assurance, Surat, said, "In 2004, due to floods in Surat, claims were Rs 30 crore. This time it will be much more. It could be Rs 50-60 crore at the retail level while for corporates it could be as much as Rs 150 crore. From the retail business there could be 4,000 claims for motor, shops, textile units and looms. RIL, Essar and Cribco have bought cover from us."

Mahendra Dhruva, national president of Institute of Insurance Surveyors and Adjusters, said surveyors in Surat and Vadodra have started working in earnest.

"Most shops have been damaged, besides cars and residents. We will ask for a minimum number of documents for insurance claims as most of the account books have been washed away and people will not be able to provide a lot of documents and proofs," he said.

For motor insurance, if a car is submerged to floor level then electronic parts will be replaced and labour charges will be paid for. If it is submerged to steering level, then fixed labour charges, electronic parts will be replaced and mechanical parts will be repaired.

Finally, if a car is fully submerged then its will be dismantled for cleaning and overhauling and electronic parts will be replaced while mechanical parts will be repaired.

For shop keepers the surveyor looks at the level at which the shop is submerged, the items that are sold whether there perishable items like foodgrains.

United India CMD MK Garg said, "The claims due to Mumbai floods a few weeks back were 6 to 7 crore. The total claims in Baroda till last week was Rs 2 crore."

Sreekumar of United India Insurance said the company so far has received a dozen claims. One of the claims filed by a chemical factory while the other was for damage of a road under construction. "We have not received any motor claims so far. We have 10 policies of over Rs 100 crore sum insured."