 "A view of a flooded area near Chennai following heavy rains")
Natural catastrophes have led to big losses for insurance companies in the past two years. With floods in Uttarakhand, cyclones HudHud and Phailin and Tamil Nadu floods occurring in the 2013-15 period, insured losses have almost touched Rs 15,000 crore.
While claims for the recent floods in Tamil Nadu and Puducherry are still being assessed, it is estimated that the losses would amount to Rs 5000 crore. Fire and engineering-related claims account for the highest value in Tamil Nadu and Puducherry, while motor insurance has accounted for the highest number of claims. At present, several surveyors are assessing the damage.
Public sector general insurance companies, including United India Insurance, New India Assurance, Oriental Insurance and National Insurance, have a higher share of overall insurance claims than the private sector, said G Srinivasan, chairman and managing director of New India Assurance.
Similarly, Life Insurance Corporation of India (LIC) said, as of December 9, 24 claims were reported and all of these were settled on the same day, amounting to Rs 29.4 lakh. In Tamil Nadu and Puducherry, they said they had also eased the procedure for settlement of claims on the lives of victims who were policyholders.
Insurance sector officials say the absence of a natural catastrophe pool that would act as the medium for loss payment has led to losses remaining high. “A pool for catastrophic events could be beneficial in mitigating insured risks from such incidents and reducing stress on balance sheets,” the general manager of a state-owned life insurance company said.
According to Lloyd’s City Risk Index 2015-2025, which presents an analysis of economic output at risk (gross domestic product at risk) in 301 major cities from 18 man-made and natural threats over a ten-year period, India’s top 10 cities have $179.8 billion (Rs 11.9 lakh crore) of GDP at risk.
Natural catastrophes such as extreme weather, pandemics and plant epidemics account for just over half ($98.1 billion or Rs 6.48 lakh crore) of GDP at risk in the 10 cities. Mumbai has the largest GDP at risk with a $47.38 billion (Rs 3.13 lakh crore) risk exposure. Almost a quarter of the city’s potential losses are related to pandemic risk, followed by terrorism at 16.8 per cent, market crash at 12.9 per cent and floods at 12.9 per cent.
In Uttarakhand, flash floods had led to almost Rs 3,000-3,500 crore losses in 2013. Most of it was related to projects as well as motor insurance.
Further, in 2014, Cyclone HudHud hit Andhra Pradesh and Odisha and this led to losses of about Rs 4,000 crore. According to senior public-sector insurance executives, the largest claims had come from Visakhapatnam, where there was severe damage to commercial units and the naval base, as well as the airport. Similarly, the crop insurance business took a hit of Rs 2,000 crore owing to destruction of fields, especially in the coastal areas of Odisha.
