When insurers run for cover

Private players seek refuge in catastrophe cover over motor claims.

The Mumbai rains could have wiped out the entire balance sheet of private insurers on car claims alone had it not been for the catastrophic risk (CAT) cover.

Most insurers will depend on the CAT cover as claims following the Mumbai rains are estimated at Rs 100 crore for each private insurance player, and much more for public sector companies.

"We are protected by the CAT cover availed from General Insurance Corporation of India (GIC). This cover comes into play where claims under a single catastrophic event cross a particular level," said Kamesh Goyal, CEO, Bajaj Allianz General Insurance Company. The private insurer has estimated claims to the tune of Rs 150 crore.

On the other hand, public sector insurance companies, which had envisaged the average cost per damaged car at Rs 10,000, have now come to terms with escalating labour charges that range anywhere from Rs 9,000 for a Maruti 800 to as high as Rs 50,000 for a Mercedes.

Over 100 Mercedes have been affected by the floods and each will cost anywhere between Rs 4-5 lakh for total cleaning, repairs and spare parts.

The floods have wrecked 6,000 Marutis, 4,500 Hyundais, 3,300 Tata Indicas and about 3,000 higher segment cars like the Mercedes, the Chevrolet, and the Skoda. Further, there are about 30,000 damaged two-wheelers, which were parked near various railway stations.

Maruti, Hyundai and Tata Motors today reached a settlement with state-owned general insurance companies on the claims for their vehicles. But private insurers continue to dither on the issue, preferring instead to decide on their own what charges should be paid for respective vehicles.

Today's meeting between state insurers and automobile manufacturers settled the labour charges for each car model.

Maruti agreed that its M800 model would cost insurers Rs 9,000 in terms of labour charges alone. Hyundai finalised labour charges at Rs 12,000 for the Santro and Rs 18,000 for the Sonata.

These charges would pertain to cars that were totally submerged in water. Since not all cars faced the same fate, insurers and automobile manufacturers agreed that labour charges would drop to 60 per cent of the agreed figure in the case of water level coming up to the steering wheel and 30 per cent for those cars in which the water had reached the seat level.

"Dealers will need to follow a 110-point checking programme, and be ready to face a technical audit by automobile manufacturers," said Mahendra Dhruva, national president, Surveyors' Association.

The audit check agreed upon by Maruti and Hyundai would ensure that only original parts were replaced, and no counterfeit parts were used in replacements, he added.

Automobile owners had been facing problems as insurance companies and auto dealers failed to agree on the labour charges. "The situation is now under control, with outstation dealers being called in to help hasten repairs," said Dhruva.

He said service stations would be able to roll out about 20-25 cars a day. "If this is not done, then the longer the water remained in cars, the faster they would corrode. Hence the need for speed," he added.