Less than 5 per cent of flood losses are insured

New Delhi: The gap between economic loss caused due to the floods in Kerala and the insured loss would be huge, finds the industry. Apart from motor, non-life insurers do not expect any significant number of claims in other segments.

The state government has estimated a loss of Rs 20,000 crore due to crop damage and destruction of property. However, the non-life insurance industry expects that not even five per cent of this will be insured loss.

“In any natural calamity, the insured loss will not be 10 per cent of it. Even in a metro city like Chennai, this was five to seven per cent. In Kerala, most of the assessed damage pertains to roads and bridges and these are not insured,” said R Chandrasekaran, secretary general, General Insurance Council.   

The major component of the insured loss would come from private cars and other vehicles. “Most of the private cars would have been covered as the insurance awareness is high in the state. But if the engines got damaged due to switching on the vehicle before they were properly dried, it will be considered as hydraulic problem and will not compensated,” he said.

Insurance companies can also put forward technical reasons for not paying claims as the floods were caused after the government discharged excess water from dams. People were warned and hence they had time to move their movable assets. However, the share of damaged houses having insurance cover would not be high and even lesser number would be those who have insured household goods. 

“We have got intimation for 117 property claims so far, mainly from Idukki, Wayanad, Alleppey, Kottayam, Ernakulam, Malappuram and Palakkad districts.  As the situation is critical at the moment, we are expecting it to take around a month for the victims to reach out to insurers with claims,” said Amitava Gupta, head-commercial claims, SBI General Insurance.

Crop insurance can get triggered as the state estimates that Rs 1,000 crore worth crops would have got damaged. But the initial claim projections by the industry put it at less than Rs 50 crore.

Sanjay Datta - chief underwriting, claims and reinsurance - ICICI Lombard, said cash crops like rubber, coffee, tea and vegetables do not have any significant insurance cover. Some claims would come from the standing paddy crop. “In Kerala, most enterprises are small to medium and are not insured,” said G Srinivasan, ex-chairman, New India Insurance.