Insurance companies may have to shell out Rs 1,500 crore on account of severe floods in Kerala that led to massive destruction of properties and claimed around 400 lives.
According to insurance officials, most of the claims have come from property, automobiles, resorts, restaurants and small units. “Total claims have crossed over Rs 1,500 crore. All these claims may not result in cash payout,” said the CEO of an insurance firm. Public sector United India Insurance got the maximum claims as it was most active in the state. “People have lodged claims for around Rs 700 crore with us. We are processing all these claims. There are claims from over 4,000 vehicle owners alone,” said KB Vijay Srinivas, General Manager and Director of United India Insurance.
Insurance companies escaped with minimum claims as most properties, especially houses, and crop were not covered for insurance in Kerala. “In Kerala we found hardly anybody is covered. When the floods came they discovered that in their term sheet they have excluded excess rainfall. They were asking when can excess rainfall happen. We only have drought… so let’s cover drought. Their crops were not covered,” Agriculture Insurance Corporation CMD Alamelu Lakshmanachari said.
CM Pinarayi Vijayan had said loss and damage to the state due to the devastating flood could be more than the earlier estimated Rs 20,000 crore. This means insurance claims due to floods are just 7.5 per cent of the losses, showing the poor insurance penetration in the country. The scenario is quite different abroad. The proportion of insured losses to overall losses was 52.5 per cent for winter damage in Japan in February 2014, 74 per cent for storm damage in USA in May, and 80 per cent for severe storm damage across western Europe in June 2014, says Prudential Insurance Brokers.
The country had seen a spate of natural calamities in the last 5-6 years. Insurance companies received claims amounting to Rs 4,800 crore after the Chennai floods in December 2015. Insurers suffered losses of over Rs 4,000 crore in two other natural disasters — J&K floods and cyclone Hudhud in Andhra Pradesh and Odisha — that wreaked havoc in 2014. While Jammu & Kashmir floods led to insured losses of around Rs 1,500 crore, the losses due to Hudhud are estimated around Rs 2,500 crore. All these claims were settled by insurers.
When the cyclone Hudhud hit Andhra Pradesh, insured losses amounted to just 7.5 per cent of the total loss. J&K flood insured losses were just 6.5 per cent of the total loss.