Lack of reinsurance cover magnifies non-life insurers' Covid-19 worries

Indian companies have to take on a high commitment to shoulder the loss (stop loss) or else pay a high reinsurance premium

For the non-life insurance companies, the scare of the coronavirus outbreak (COVID-19) has been magnified since almost none have found any reinsurance cover in the international markets.

The companies finalise their reinsurance treaties by March every year for the next financial year. The disease has surfaced as a major risk at the fag end of the season.

“We buy reinsurance based on large risks like fire for a factory or for an aircraft, and so on,” a source said. Each medical or motor vehicle insurance that is written carries no such large risk and, hence, is an attractive portfolio for insurance companies