Insurance Cos brace up for floods in Gujarat again

After last year's deluge, which saw accumulation of heavy losses for the diamond-cutting industry in Surat, insurance companies are now bracing up for any eventuality rising out of the heavy rainfall in Gujarat.

However, this year it is the brass and foundry industries and others around Jamnagar and Rajkot that seem to have faced the brunt of the weather's fury so far as labourers have not been able to turn up for work.

Insurance officials say that diamond traders this year are well prepared to face the floods, with most of them opting for insurance cover.

According to C N Shreekumar, Chief Regional Manager, United India Insurance Company Ltd, "We have estimated that approximately 1,000 diamond traders from the Surat diamond industry have taken insurance cover."

He added that approximately Rs 700 crore of insurance cover has been taken up by diamond traders in Surat.

United India Insurance Company has received claims worth Rs 40 lakh as of now and it is expected that if the water logging continues, the claims might reach Rs 1 crore.

The claims are said to be pouring in from Bharuch, Akleshwar and from some parts of North Gujarat. However, company officials say that they have not witnessed any major claims so far.

R N Ghelani, chief regional manager, Oriental Insurance Company Ltd, Ahmedabad, told Business Standard, while it is premature to talk of the losses in the first few days of the downpour, losses have been reported from Saurashtra region.

"A few claims have trickled in from Junagadh, Jamnagar and Bhavnagar," he said.

According to him, the damages reported are from the low-lying areas from the Saurashtra region and that initial reports do not give an indication of large scale losses.

Hitesh Bagdai, President, Rajkot Chamber of Commerce and Industry, said that 80 per cent of industries in Jamnagar and nearby areas have not been functioning for the last two days.

However, industry sources say that when it comes to insurance, apart from the larger units, very few small units have insurance cover despite the losses faced by Surat and the nearby areas during floods last year.

The brass industry in Jamnagar which houses close to 3,000 units had to be shut for the day as close to 50,000 workers from surrounding areas could not reach the factories. About 60 per cent of the 3,000 units are small units which produce close to 20-25 kgs of brass parts and the rest are medium and large units producing 100-500 kgs of brass parts on a daily basis.

The situation is equally dire in the foundry industry in Jamnagar which hosts around 650 foundries of which 90 per cent are small scale foundries which deal in materials around 500 kgs.

The insurance sector experts feel, if the monsoon continues and the situation worsens, major claims could make their way from the industrial sectors and claims for automobile insurance would not amount to much.