Insurers say Kerala floods claims may touch Rs 500 crore

MUMBAI: Insurance companies are likely to take a Rs 500-crore hit from the Kerala floods, as they have started receiving claim intimations from the state battling the worst natural disaster in at least a century.

The entire state is hit by the rain fury, causing a huge loss of life and damage to property, and crippling the tourism- and services-heavy economy. Insurers are expected to take losses mainly under householders’ policies and life and motor claims. “Looking at the initial claim intimations, we expect claims under general and life insurance to touch Rs 500 crore,” said an executive of a public sector insurer.

A New India Assurance executive said the state-run insurer has started getting claim intimations from individuals and industries. The company got 65 claims worth Rs 35 crore in the first round of intimations and another 110 claims are expected in the second round, said the executive. Several of these people, who have already initiated claims, are on vacation in Malaysia and have made the claims through emails. “We expect more people to file once they go back from relief camps,” he said.

About 370 people were reported dead in rain-related incidents in Kerala since the monsoon started in late May, with more than 200 of those in the past week. Lakhs of people are currently in relief camps as their homes are inundated or damaged. Apart from life, property and motor, insurance claims are expected under the Pradhan Mantri Suraksha Bima Yojana and Pradhan Mantri Jeevan Jyoti Yojana. Many factories and stockyards are submerged and the loss assessment on those will come in over the week. “A large number of vehicles are flooded with water,” said an executive with a private sector company. “Dealer workshops are submerged in water.”

Claims are also expected from the impact on rubber productions in a state that accounts for more than 90% of the country’s output of the commodity. Estimated loss to coffee, tea, cardamom and rubber estates are Rs 600 crore, but all of those aren’t insured. “Kerala as a state did not take large crop insurance policies, unlike other states like Madhya Pradesh,” said Sanjay Datta, head of underwriting at ICICI Lombard.

Insurers expect many claims to come after the water recedes from worst affected areas such as Thrissur, Chengannur, Ernakulam and Kuttanad. They expect claims also from the Kochi airport, which has an insurance cover of Rs 2,500 crore. But the claim amount is likely to be in low double digits as operations at the airport were suspended early, limiting damage. Health insurers could take a hit with likely claims from waterborne diseases after the floodwaters recede.

Looking at the loss to life and property in the state, the insurance regulator had asked insurance companies to take urgent steps for expeditious settlement of claims. Companies have since eased the process for hassle-free claim settlement.

The biggest catastrophe losses to insurers in the recent past have come from floods. Claims from the 2015 Chennai floods were the highest for the general insurance industry at Rs 5,000 crore, followed by Jammu & Kashmir and Uttrakhand floods at about Rs 2,000 crore each. According to a Swiss Re report, on average about 30% of catastrophe losses have been covered by insurance over the last 10 years.