Insurance companies have suffered losses of over Rs 4,000 crore in two natural disasters — Jammu & Kashmir floods and cyclone Hudhud in Andhra Pradesh and Orissa — that wreaked havoc in the last two months.
While Jammu & Kashmir floods have led to insured losses of around Rs 1,500 crore, the losses due to Hudhud are estimated around Rs 2,500 crore. “Our estimate is that the total insured losses could be close to Rs 2,500 crore in Andhra Pradesh and Orissa due to Hudhud,” said a top official of public sector insurance firm.
“We expect insured losses of Rs 1,500 crore in Andhra Pradesh,” said the chairman of another leading PSU insurance company. Insurance Regulatory and Development Authority (IRDA) chairman TS Vijayan had recently said that the regulator may look at having a separate catastrophe insurance as an option.
“We’re worried about the next. I’m hoping that the cyclonic storm which is expected to hit the Gujarat coast will not cause damages,” New India Assurance chairman G Srinivasan said. As per the latest reports, cyclonic storm ‘Nilofar’ has weakened and would further weaken as it comes closer to Gujarat coast and cross it as a marginal cyclonic storm.
“The majority of the insured damage caused by Hudhud is concentrated in Visakhapatnam — the largest city in Andhra Pradesh with a population of 2 million,” said Praveen Sandri, managing director and senior vice president at AIR Worldwide India. “Many of the commercial buildings in Asilmetta, Sampath Vinayaka Temple Road, Maddilapalem, and Muralinagar in Visakhapatnam, and a reported 48,000 residential homes in Orissa’s southern districts were badly damaged.” Hudhud would have generated economic losses of many times more than the insured losses.
“We had received several thousands of insurance claims from J&K. Most of these are small-size claims, particularly from shopkeepers,” said an insurance sector official. Insurance companies have filed a review petition in the Jammu & Kashmir High Court against its order directing insurers to pay immediate interim relief before conducting the mandatory surveys in J&K floods.
As per the court order, insurers will have to pay 50 per cent of the insured amount for policies above Rs 25 lakh and 95 per cent for policies below Rs 25 lakh as interim relief to people of the state who were affected by the floods.