Kathmandu. Property insurance rates across India have increased by about 25 to 30 per cent due to heavy claims due to the recent Gujarat floods and several other natural disasters. This increase is mainly due to insurance companies reducing the important discounts provided earlier instead of increasing the base rate.
According to industry officials, the change reflects a more cautious approach taken after the loss. Those losses have put pressure on actuarial results in fire and property segments.
According to Business Standard’s report and actualists’ comments, the Gujarat floods alone are estimated to generate claims of around Rs 5,000 crore. Most of which is related to property. Large industrial claims related to the generating plant are already estimated to be around Rs 1,000 crore. However, many of these risks have been widely re-insured. The quantum of losses, especially for large commercial and industrial, has forced companies to tighten pricing.
Gurdeep Singh Batra, head of commercial actuarial at Bajaj General Insurance, said that the premium rates are increasing mainly due to lower discounts. “However, the base rate of natural disasters remains unchanged,” he said.
Insurance companies have been competing aggressively in pricing for some time now. The Insurance Regulatory and Development Authority of India had already warned against this practice in the fire insurance market. Recent incidents have accelerated this process of reform.
This change is most visible for industrial and commercial property coverage in flood-prone or high-risk areas. Homeowners and small businesses may also be affected as insurance companies review overall terms.
Gujarat has long been one of the states with a high insurance burden for property risk. As a result, the amount of claims is high.
Similar weather-related events have added to the pressure in other parts of India. As a result, insurance brokers and risk managers are advising customers to expect stricter renewal terms with less flexibility in discounts than in recent years. This trend highlights how frequent natural disasters are changing pricing in India’s non-life insurance market.
