Fire, marine covers to cost more

The premium on fire and marine transit insurance covers is expected to increase by 10-15 per cent following the recent incidents of fire in Bangalore, Kolkata and Delhi.

Executives at insurance companies said the recent incidents have increased the risks from fire, especially in case of warehouses and transit-related insurance.

“Ultimately, premium is a function of claim. The increasing number of claims will lead to an increase in premium,” said Bajaj Allianz General Insurance head of underwriting T R Ramalingum.

“Storage houses and warehouses may see an increase of around 15 per cent in premium. Deductibles in marine will also go up after the recent incidents,” said Tata AIG General Insurance Managing Director and CEO Gaurav D Garg.

An increase in deductibles will result in companies and individuals having to shell out more to make claims. The two moves are aimed at minimising the losses arising from the fire portfolio.

Over the last few weeks, there have been two major instances of fire in Bangalore, including the one in Carlton Towers, a commercial complex, and today’s incident in the godowns of Gokaldas Exports.

In addition, New India Assurance Company has had to take a Rs 35 crore hit due to a fire at the Tughlakabad internal container depot. Other insurers are facing claims from traders whose goods perished in the fire. There was also a fire in a plastic market in Delhi though the scale of damage was not known.

In Kolkata, there were a large number of casualties in Stephen Court on Park Street, though insurers would get away in the absence of a cover.

Generally, in a non-life sector, property insurance covers losses from fire. In India, a majority of the general insurance policies, including property covers purchased by large companies, come up for renewal in April. To that extent, the damage would be limited, though there are several large companies, such as SAIL and Reliance, which have renewals later in the year. In addition, transit marine is insured through the year, depending on when the consignments leave. The term of this policy is 60 days.

Though premium rates depend on the nature of the risk insured, it is less than one per cent of the sum assured in most cases. In case of marine, cargo rates also depends on factors like nature of cargo, scope of cover, packing, mode of conveyance, destination and routes, and past claims experience.