Marine hull premia to rise 40%

GENERAL INSURANCE INDUSTRY BRACES UP FOR DETERIFF REGIME

Shipping companies would see marine hull insurance premium rising back to the level prevailing before the risk was detariffed in April 2005.

General insurers say premium on older ships would increase by as much as 40 per cent when the annual insurance renewal comes up in July 2006.

Marine insurance premium had fallen by 40-50 per cent after the risk was detariffed in April 2005, because of cut-throat rate competition and that the Shipping Corporation of India was the biggest beneficiary.

The sharp drop in premiums had led to Indian reinsurer, General Insurance Corporation (GIC), declining to provide reinsurance cover. General insurers said good shipping fleets with no loss record may get a further 10-20 per cent reduction in premiums.

General Insurers said since a large portion of the Indian marine fleets had an adverse loss experience, premium for reinsurance for these ships will rise substantially. A marine hull policy covers damage and loss to ships because of causes like collision of ships and and also partial loss for liabilities like pollution.

"There will be a fair amount of stabilisation this year. There will be a strong demarcation and differentiation between fleets. Several factors such as the claims history of the fleet, maintenance, condition, average age of the vessel, etc, will be considered for deciding the premium rate," Deepak Sood, head of business development for marine hull business at Bajaj Allianz General Insurance Company, told Business Standard.

Many general insurers, including the leading marine hull insurer Oriental Insurance Company, last year got reinsurance for marine hull policies done from international reinsurers.

Bajaj Allianz's Sood said the overseas re-insurers had underwritten marine hull risks from India for the first time last year and will seek a much higher premium this year for fleets which had an experience of making loss.