New Delhi,Feb 11: With hardly Rs 800 crore worth of life and property insured asagainst the colossal Rs 20,000 crore damage in earthquake-ravaged Gujarat,there has been a demand for raising the `catastrophe reserve' of insurancecompanies to international levels.Although the Insurance Regulatory and Development Authority (Irda) hasindicated a catastrophe reserve for insurance companies, industry sourcessaid the amount should go up to international levels ranging between 0.5-5.0per cent of net premium income.
This would translate into a reserve of about Rs 250-2,500 crore every yearset aside specially for catastrophes, considering the combined premiumincome of insurance companies at about Rs 50,000 crore.Insurance companies are believed to have agreed to this idea if governmentexempts such reserves from tax. When contacted, Central Board of DirectTaxes (CBDT) chairman A Balasubramanian said there has not been any proposalfrom Irda so far.
Sources said Irda was examining the issue and would take appropriate stepsshortly. There is also a move to carry out surveys and assess risk,specially for catastrophe.
Sources said this would be carried out by the Indian Insurance Council (IIC)which would be revived in the near future. All the existing and the newinsurance companies would be involved in the IIC, they said.
Lack of awareness and low penetration by the insurance firms in the countryhas led to lesser insurance coverage for people affected by calamities.
Currently, a marginal 10 paise additional premium is charged on a policy ofRs 1,000 for earthquake, as compared to 50 paise for insurance against fire.Depsite this, people tend to neglect the earthquake cover, they said.
They cite the Gujarat's example saying that hardly five per cent of the lossof life and property was insured despite the fact that insurance cover inthe state was relatively higher than in Orissa, which was hit by the supercyclone last year. The actual damage in Bhuj and other areas are still to beascertained even as the official estimate put it at a little over Rs 20,000crore while industry pegged it at over Rs 25,000 crore.
Although Life Insurance Corporation and the four general insurance companieshave expedited and simplified claim settlement, official sources said untilthe debris is cleared the insurance claims cannot be ascertainedaccurately.
A team of insurers is currently visiting the earthquake affected areas toassess the loss and take necessary actions.
Most of the insurers including Life Insurance Corporation had set up specialcells and relaxed norms to expedite and simplify claims settlements in thestate.
(PTI)
Copyright © 2001 Indian Express Newspapers (Bombay) Ltd.
