India Inc's insurance cost to go up as GIC Re hikes reinsurance premiums
Mumbai: India Inc has to shell out a lot more premium within the range of 20-50 per cent in the property segments, as GIC Re has decided to hike its reinsurance premium in as many as 291 occupancies since January 2020.Most of...
India Inc has to shell out a lot more premium within the range of 20-50 per cent in the property segments, as GIC Re has decided to hike its reinsurance premium in as many as 291 occupancies since January 2020.Most of renewals in the Indian market happen on Apr1.
GIC Re has also increased its reinsurance premium for marine Hull and Cargo that move in the Middle East region after hostility has falred up between US and Iran.
``We have increased our premiums by 10 paise and 15 paise for Hull and Cargo respectively for the ships in the ME riogion.We feel the region has become risiker,'' said a senior GIC official.
Property cover include allied perils ranging from lightning, storm, flood, earthquake, explosion to the plant, machinery, stock and furniture in a unit of a company.
Effectively, GIC Re followed by other foreign reinsurers which operate through their branches in the country, wouldn’t provide reinsurance covers any primary insurers unless they pay the revised higher premiums and in turn the primary insurers will have to pass on the higher rates to their customers.
``We took a decision to hike the reinsurance rates after Insurance Information Bureau(IIB) came out with the latest figures concerning burning costs in different segments of the domestic general insurance industry . IRDAI rules mandate that the re/insurance rates should be fixed on the basis of the burning costs,’’ said a senior official of the GIC Re.
The burning cost takes into account losses that are already or to be paid over the premiums mobilised in a particular segment and indicate that premiums are not commensurate with the premiums.
A few years back,the IRDAI , in a bid to check the underpricing out of unbridled competition to corner customers in the post detariffing regime,had come out with the regulations that no insurers can charge premium below the burning costs as prepared by the IIB.
GIC Re has started increasing premiums since Jan 2019 by raising it in eight industrial categories where claims have been high in recent years.
Post detariffing in the general insurance industry since 2008,discounts offered by the general insurers had even crossed 90 per cent in the fire premium and thereby incurring losses that were putting the over all financial pararmeters of the industry at stake.