Huge claims Insurers aint losing any sleep

New Delhi, Aug 2 | Updated: Aug 3 2005, 05:30am hrs
As Mumbai limps back to normalcy amidst debris of hope and riches, general insurance companies can still have a good nights sleep as their profit margins will not be impacted significantly, thanks to re-insurance. For a claim of Rs 100 crore, a company will have to bear a hit of only Rs 5 crore in case of a re-insurance, an industry analyst says.

Insurance companies are expecting claims worth over Rs 2,000 crore. Some Rs 1,200-1,500 crore worth of claims have already been received. Large chunks of claims have come from companies for their machinery. Motor claims are estimated to be at about Rs 150 crore. Sources said claims owing to the damage of stocks would also be significantly large.

The number of claims, till now, is estimated at about 700-800. However, M Ramadoss, chairman and managing director, Oriental Insurance, said the number of claims would go up in the next few days. It is not a major concern for us as most of it is re-insured and, therefore, it will not reflect on our balance sheets, he said. An official at ICICI Lombard said the average claim size from motor insurance would not be significantly large.

Despite heavy rains and water-logging, vehicles are more or less in proper shape; engines need to be dried apart from changing the upholstery. The claim size, therefore, is relatively small, he pointed out.

Meanwhile, the public sector general insurance companies would have to take an additional hit.

The fire at ONGC offshore drilling platform could cost the insurance companies $3000 million, even though this too has the cushion of re-insurance.

But one thing for sure, while claims from the tsunami disaster in December were limited, the Mumbai deluge has seen huge claims. It is likely to be one of the longest chapters on claims in the history of the insurance sector in India.