The hike is driven by reinsurers who have faced mounting claims from catastrophic events worldwide, pushing for more sustainable pricing structures.
Businesses across various sectors are bracing for a sharp increase in property insurance premiums, with rates set to rise between 20% and 70% from April 1 (Representational image)
Businesses across various sectors are bracing for a sharp increase in property insurance premiums, with rates set to rise between 20% and 70% from April 1, 2025. Companies renewing their insurance cover for properties, plants, machinery, and operations will bear the brunt of higher premiums, as insurers adjust pricing to align with global reinsurance trends.
The hike is driven by reinsurers who have faced mounting claims from catastrophic events worldwide, pushing for more sustainable pricing structures. Industries such as chemicals, plastics, textiles, and pharmaceuticals—considered high-risk due to their significant claims history—are expected to be the most impacted.
According to Sudhish Ramteke, Property Practice Leader at Anand Rathi Insurance Brokers, commercial property insurance premiums, including fire and Industrial All Risk policies, have already increased by 12-15% for contracts due on or after January 1, 2025. "For policies renewing from April 1, the increase is projected to be between 20% and 50%. Companies that secured maximum discounts during their July 2024 renewals could see premiums surge by 50-70% compared to last year," he said.
Further tightening the market, insurers have discontinued discounts on fire and natural catastrophe (NAT/CAT) policies. Businesses with an adverse claims ratio exceeding 100% over the past one to three years could face additional premium loadings, further escalating costs.
GIC Re Chairman Ramaswamy Narayanan recently highlighted that insured catastrophe losses globally have reached $150 billion this year. While much of these losses were absorbed by insurers, the reinsurance market has been impacted by major disasters such as Hurricane Helene, Cyclone Milton, and the Los Angeles wildfires, along with severe weather events in Spain, Italy, and the UK.
Despite these challenges, Narayanan noted that reinsurance capacity increased during January 1 renewals, leading to relatively stable pricing. However, Indian insurers are now recalibrating their rates to ensure adequate coverage and long-term sustainability, signaling a significant shift in the domestic insurance landscape.
With premium hikes on the horizon, businesses will need to reassess their risk management strategies and budget for higher insurance expenses in the coming years.
The hike is driven by reinsurers who have faced mounting claims from catastrophic events worldwide, pushing for more sustainable pricing structures. Industries such as chemicals, plastics, textiles, and pharmaceuticals—considered high-risk due to their significant claims history—are expected to be the most impacted.
According to Sudhish Ramteke, Property Practice Leader at Anand Rathi Insurance Brokers, commercial property insurance premiums, including fire and Industrial All Risk policies, have already increased by 12-15% for contracts due on or after January 1, 2025. "For policies renewing from April 1, the increase is projected to be between 20% and 50%. Companies that secured maximum discounts during their July 2024 renewals could see premiums surge by 50-70% compared to last year," he said.
Further tightening the market, insurers have discontinued discounts on fire and natural catastrophe (NAT/CAT) policies. Businesses with an adverse claims ratio exceeding 100% over the past one to three years could face additional premium loadings, further escalating costs.
GIC Re Chairman Ramaswamy Narayanan recently highlighted that insured catastrophe losses globally have reached $150 billion this year. While much of these losses were absorbed by insurers, the reinsurance market has been impacted by major disasters such as Hurricane Helene, Cyclone Milton, and the Los Angeles wildfires, along with severe weather events in Spain, Italy, and the UK.
Despite these challenges, Narayanan noted that reinsurance capacity increased during January 1 renewals, leading to relatively stable pricing. However, Indian insurers are now recalibrating their rates to ensure adequate coverage and long-term sustainability, signaling a significant shift in the domestic insurance landscape.
With premium hikes on the horizon, businesses will need to reassess their risk management strategies and budget for higher insurance expenses in the coming years.
( Source : Deccan Chronicle )
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