Earthquake panic leads to surge in insurance enquiries

Industry says that awareness remains a big problem

Repeated incidents of earthquakes in eastern and northern regions of the country have pushed up the demand for home insurance policy by at least 15-20% in the last one month.

"There has been an increase in enquiries for home insurance policies, particularly in states like UP, Bihar and West Bengal, which had experienced aftershocks of the Nepal earthquake. There has been nearly a 15% increase in demand as well. The corporates are also reviewing their insurance cover to ensure that they are adequately covered," said Sanjay Datta, Chief Underwriting & Claims, ICICI Lombard General Insurance Company.

But insurers are not convinced whether the enquiries will translate into final sale of coverage policies. The reason they say is lack of awareness. "Awareness is extremely low. This kind of cover can protect your house and contents but the growth of such covers is not happening at the pace it should," said Mukesh Jain, director and spokesperson of Insurance Brokers Association of India (IBAI) - the only IRDA-recognised body of licensed brokers.

In fact, insurers say there was a similar spurt in enquiries during previous natural disasters- during the flood in Kasmir and Uttarakhand and the earthquake in Gujarat and Sikkim but it did not translate into sale

"There is an increase in the number of household insurance policies by at least 15-20%. However, the increase is still less than that what was after the earthquake in Gujarat. After the earthquake in Gujarat, there close nearly 50% increase in house insurance policies but that din't realize to ultimate demand," said, K G Krishnamoorthy Rao, Managing Director and Chief Executive Officer, Future Generali India Insurance.

Normally, insurance companies in India provide two kinds of home insurance policies; one that covers the structure and construction costs in the event of damage to the property due to natural calamities while the other insures belongings and household contents.

The premium differs depending on the area and frequency of seismic activity in that zone. " The premiums are very reasonabale,we do a due examination of the property whether residential or commercial and then decide on the premium," said Jain.

India is divided into four earthquake zones and rates vary from 0.05 paise per thousand to 0.50 paise per thousand depending on the zone they fall into and nature and occupation of property which can be termed as residential or commercial. For instance - for the most hazardous zone i.e. Zone 1, it costs Rs 50 and for least hazardous zone i.e. Zone 4, it costs Rs 5, to buy an earthquake insurance for a building worth Rs 1 lakh.