Insurers may face flood loss claims of Rs 3,000 crore

Floods in Maharashtra, Gujarat and West Bengal have turned into a nightmare for insurance companies, as initial reports from these states indicate losses of up to Rs 3,000 crore. In 2005, the losses due to the Mumbai rains were estimated at over Rs 1,000 crore.

An executive at a public sector general insurance company said that post-2005, awareness about insurance had significantly increased, which, in turn, had pushed up new insurance accounts.

"This time, claims are likely to be much higher than those in 2005, with insurance policies for general household goods or even from small and medium shopkeepers showing a rise. Prior to the Mumbai floods in 2005, awareness was low and consumers never felt the need to insure their properties and assets," the executive said.

General insurers literally expect a flood of claims once the situation improves in these states.

"A clearer picture would emerge once the claims come in," the official added. After the claims are made, they would be assessed and then the final settlement amount would be made available.

Pavanjit Singh Dhingra, vice-president, Prudent Insurance Brokers Pvt Ltd, said this time, the hinterlands-where insurance penetration was low-were the most affected. "Hence, insurance companies need not worry too much," he said.

Source: The Financial Express