The Hindu Business Line : Insurers feel the heat of `fire' claims

HYUNDAI Motor India Ltd has slapped a claim for Rs 10 crore on United India Insurance Company against cover for the loss on account of a fire at its plant on February 2.

Fire broke out at the car manufacturer's paint shop and resulted in loss of property. It is understood that the survey work for assessing the loss on behalf of the insurance company is almost complete and that the surveyor has asked for details relating to replacement cost of some of the damaged equipment.

Sources in the insurance industry point out that there has been a spate of high-value fire claims in the last one year. Some of them are: a Rs 14-crore claim on Tata AIG by Redington India; Rs 15-crore of Hyundai Polyflex (a supplier to Hyundai Motor India) on New India; and a Rs 18-crore claim of Vijay Garments, understood to be on a public sector insurer.

There was a fire accident in Matrix Laboratories of Hyderabad on Saturday. The mishap claimed four lives, but preliminary estimates are that the damage to property is minimal. The risk is insured with Oriental Insurance.

"The average size of risk has gone up," observes Mr P.S. Raamanathan, Loss Adjuster and Forensic Engineer and member of International Association of Arson Investigators. "What you are seeing as large claims is only a tip of the iceberg," he told Business Line. He said that a disturbing trend was that most of the insurance companies were not reinsuring enough, in order to save premium. Mr Raamanathan said that even the Insurance Regulatory and Development Authority had not woken up to the need for "portfolio monitoring".

Mr N. Raveendran, Managing Director, Alegion Insurance Services Ltd, a broking firm, also notes that the accidents that are occurring nowadays are resulting in big losses to the insurers. "Everybody perceives `fire' to be a profitable portfolio. In reality, it may not be so," Mr Raveendran said. He observed that once the fire portfolio is detariffed, prices would only rise.

There is, however, a different view as well. Mr R Thyagarajan, Chairman of the Shriram group of companies and Director, Armour Consultants, feels that statistically, in one year there could be high losses due to fire and there may not be any fire occurrence for many years.

Risk perceptions are different — that is what insurance is all about.

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