Money & Banking

GIC Re revises fire premium rates, to impact average premium by 25 %

Surabhi Mumbai | Updated on January 27, 2020

State-owned reinsurer General Insurance Corporation of India (GIC Re) has hiked the fire premium rates for all 291 occupancies from January 1 this year, which will increase the premium on an average by about 25 per cent across all occupancies.

“There is some increase in fire premium rates. Indian Insurance Bureau (IIB), which is an independent body under IRDAI , has come out with loss costs (burn costs) for 291 occupancies under Fire class of business in November 2019,” Reena Bhatnagar, GM (Property), GIC Re, told BusinessLine.

These burn costs are the based on five year claims data collected from all cedants in the market, she further said, adding that these costs do not include management expenses or profit margin.

“GIC has introduced an endorsement to all Fire treaties in the market effective January 1, 2020, mandating the IIB loss costs will be the minimum rates at which risks can be covered,” she said.

After offering discounts for more than a decade, GIC Re increased premium for eight sectors under property class including thermal power plants, textiles, pharma and steel in March last year, in line with the claims history of this sectors across the domestic market.

“This resulted in significant increase in premium rates for some sectors and clients, for risks which are ceded to the treaties with GIG Re,” it had said at the time, adding that the move was aimed at correcting the imbalance between the premium rating and claims history over a number of years.

The correction is premised on the loss data (burning cost method) compiled by the industry body IIB, it had noted.

Published on January 27, 2020

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