 "Reinsuarance back-up safeguards GICs from premium loss")
Despite facing the natural calamities in quick succession in the current year the general insurance companies are not expected to be overly burdened by the premium loss as they are all have the reinsurance back up.
As a result the risk premium is unlikely to go up in any significant fashion next year, according to M Ramaprasad, member (non-life) of the Insurance Regulatory and Development Authority of India (IRDAI).
Speaking to reporters on the sidelines of an event on Thursday, Ramaprasad said the initial worries about the increased impact of natural calamities on the non-life companies were put to rest when they found that all the general insurance players have taken reinsurance to bring down the risk involved in their business.
According to Prasad, the recent Hudhud cyclone that inflicted heavy damages to the industries and other establishments in the coastal city of Visakhapatnam and the surrounding areas in Andhra Pradesh had resulted in damage claims of around Rs 2,600 crore.
The New India Assurance Company and the United India Insurance Company, the two public sector general insurers, have been handling most of these claims, according to him.
Of this, almost Rs 1000 crore-Rs 1,200-crore claims were received only from two entities-- the Vizag Steel and a power project-- he said while responding to a question on reports that Hinduja power project, which is yet to start operations, had suffered major damages under the cyclone impact.
Similarly the general insurance companies had received claims worth about Rs 2,000 crore on account of the damages suffered by the industry and other businesses in the Jammu and Kashmir floods earlier this year, according to Prasad.
While the total claims from these two instances would be in the range of around Rs 4,500 crore, the companies would get back at least Rs 1,500 crore by way of reinsurance and the actual loss of premium would not be more than 6 per cent of the total size of premiums collected by the companies this year, he said.
Till January 2015, the general insurance companies have collected about Rs 85,000 crore in total business premium in the current financial year as compared to Rs 77,000 crore in the same period previous year, registering around 10 per cent growth.
The growth in premium collections has been is little lower since the general insurance companies have faced a particularly sluggish growth in motor premium collections in the first six months, according to him.