Money & Banking

Insurers gearing up for ‘Cyclone Fani’ claims

Surabhi Mumbai | Updated on May 05, 2019 Published on May 05, 2019

Most claims are expected for damage of property and vehicles.   -  STR

Loss due to inadequate coverage is huge in most natural calamities: officials

Insurers are gearing up to process claims after cyclone Fani ravaged parts of Odisha but many say underinsurance continues to be the bigger challenge.

“The unfortunate reality is that the uninsured losses in most natural calamities are much higher. I don’t think the situation will be much different here,” said Roopam Asthana, CEO and whole-time director, Liberty General Insurance.

Most claims are expected for damage of property and vehicles and hospitalisation and some for damage to crops. Life insurance claims will be less largely due to the State’s improved disaster management efforts.

The general insurance density in Odisha is at ₹706 in 2017-18, which was lower than that in a number of States. Insurance density is defined as the ratio of premium underwritten in a given year to the total population.

An executive with an insurance company, who did not wish to be named, said insurance companies will now begin work and set up camps to process insurance claims in the State. “It is too early to make a figure but it could be in the range of ₹2,000 crore or so,” he said, pointing out that unless people have covers for claims payouts for property or an engine cover, it is difficult to process claims.

However, Asthana pointed out that there is much more awareness now. For instance, in case a car is completely submerged in water, people realise that they should not start the engine.

The Insurance Regulatory and Development Authority of India is also expected to issue advisories for claims processing in the cyclone-affected areas. “In such situations, camps are set up by the large insurance companies and all insurers are advised to settle claims speedily,” said the second official.

Significantly, even in previous natural calamities like the Chennai and Kerala floods the insured losses were just a fraction of the actual losses.

Natural calamities are seen as one of the top risks by insurers.

Insurance gap

The Lloyd’s Underinsurance Report 2018 had estimated that India has the second largest global underinsurance at $27 billion. “India suffers, as its neighbour Bangladesh does, from flooding and earthquakes in the north around the Himalayas, but with a far more developed economy, it has significantly more GDP potentially at risk in absolute terms,” it had said.

“Widespread flood events from 2018 such as the one that affected Kerala have led to Indian companies being increasingly worried about natural catastrophes… This is unlikely to abate in the near future, as AGCS predicts that 80 per cent of the world’s top 10 exposed flood locations in 2070 will be in Asian cities, with Mumbai and Calcutta included,” Allianz Global Corporate Specialty had said in its Allianz Risk Barometer 2019, with cyber risk being the top challenge.

Published on May 05, 2019
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