Come July 1, fire insurance premium may go up since the insurance regulator is trying to check the insurance players from deep discounting in premium to gain market share. A new set of burning cost ‘referral’ rates from the Insurance Information Bureau is going to be applicable from July 1 and that could see premium going up substantially in several ‘occupancies’. “With the new IIB reference data on burning cost for fire insurance from July 1, several occupancies could see substantial rise in premium and leaving many untouched. But the changes being introduced could impact differently on each occupancies on insurance companies,” Assocham’s insurance council chairman and GM of National Insurance KB Vijay Srinivas told PTI.
“Our new set of reference rates for fire will be applicable from July 1 but these are not compulsory on insurance companies,” Insurance Information Bureau’s CEO Kunnel Prem said. As the industry loss ratios increased from around 30 per cent before de-tariff regime to 60-75 per cent for fire due to deep discounting on premium to gain market share, the insurance regulator was trying to curb unsustainable premium rate war. The idea is that burning cost should be proportion to premium so that a company does not make losses.
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Insurance Information Bureau’s CEO Kunnel Prem said number of occupancies has been increased from 85-90 to 101 as new industries have come up. The list of risk occupancies have been revised from 90 to 101, he said. In simple terms, occupancies in insurance are referred as products, a sector or class of asset and different occupancies carry different risk of loss, officials said.