Engineering insurance growth slows

There has been a 10-12% drop in the premiums under fire and engineering policies

Fire and engineering insurance has seen a drop in growth owing to very few projects taking off.

According to industry experts, there has been a 10-12 per cent drop in the premiums for policies that cover plants and projects from fire and other risks associated with construction and maintenance. Insurers have been offering heavy discounts in premiums for such policies.

“Since not many new projects were coming up, there was tough competition to retain existing customers. Now there are signs of growth,” said the underwriting head of a private general insurer.

"Stalled infrastructure projects will finally kick off in 2016, thereby boosting engineering insurance," said KG Krishnamoorthy Rao, managing director and chief executive officer, Future Generali India Insurance.

Industry sources said after price controls on premiums for fire and engineering insurance were removed in 2007 there were instances of 60-70 per cent decline in rates.

Industrial output grew at its fastest pace in five years at 9.8 per cent in October on robust festival demand. A four-and-a-half month high growth in manufacturing fuelled industrial production.

The Index of Industrial Production grew 3.6 per cent in September 2015 and had contracted 2.6 per cent in October 2014, so the October expansion was on a low base. But economists warned October could turn out to be a statistical aberration.