Despite facing natural calamities in quick succession in the current year, the general insurance companies are not expected to be overly burdened by the premium loss as they all have reinsurance backup.
As a result, the risk premium is unlikely to go up in any significant fashion next year, according to M Ramaprasad, member (non-life) of the Insurance Regulatory and Development Authority of India (IRDAI).
Speaking to reporters on the sidelines of an event here on Thursday, Ramaprasad said the initial worries about the increased impact of natural calamities on non-life companies were put to rest when they found that all the general insurance players have taken reinsurance to bring down the risk involved in their business.
According to him, the Hudhud cyclone that inflicted heavy damages to the industries and other establishments in the coastal city of Visakhapatnam and surrounding areas in Andhra Pradesh resulted in damage claims of around Rs 2,600 crore. New India Assurance Company and United India Insurance Company, the two public sector general insurers, have been handling most of these claims, according to him. Of this, Rs 1,000-1,200-crore claims were received only from two entities - Vizag Steel and a power project- he said while responding to a question on reports that the Hinduja power project, which is yet to start operations, had suffered major damages under the cyclone impact.
Similarly, the general insurance companies had received claims worth about Rs 2,000 crore on account of the damages suffered by the industry and other businesses in the Jammu & Kashmir floods.
While the total claims from these two instances would be around Rs 4,500 crore, the companies would get back at least Rs 1,500 crore by way of reinsurance and the actual loss of premium would not be more than 6 per cent of the total size of premia collected by the companies this year, he said.
Till January 2015, the general insurance companies collected about Rs 85,000 crore in total business premium in the current financial year as compared with Rs 77,000 crore in the same period previous year, registering around 10 per cent growth.
The growth in premium collections has been a little lower since the general insurance companies faced a particularly sluggish growth in motor premium collections in the first six months, according to him.
