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GIC Re to remain as the only locally-owned reinsurer after competitor's license is cancelled

May 13, 2019

The Insurance Regulatory and Development Authority of India (IRDAI) has cancelled the registration of ITI Re citing its inability to commence business within the prescribed timeframe.

Established three years ago, ITI Re first received a certificate of registration (CoR) effective 30 December 2016. The reinsurer had two years from the date of the CoR to secure new business and, having failed to do so, surrendered its license.

This latest development means that General Insurance Corporation of India (GIC Re) retains the position as the only local firm in the country’s reinsurance sector. The sector still has many active international reinsurers.

Seeking to service the direct insurance markets in India and other global markets, ITI Re described itself as the ‘first private sector reinsurance company in India’. The firm was promoted by Investment Trust of India (previously called Fortune Financial Services).

According to, Investment Trust of India holds 80% stake in the reinsurance firm while Lakshdeep Investment & Finance and Suraksha Realty hold 10% stake each. In June last year, the Investment Trust of India was planning to sell its entire stake to Go Digit Infoworks Services, backed by Fairfax Group chief executive Prem Watsa. However, IRDAI did not clear the deal.

ITI Re’s failure can be attributed to the lack of a proper credit system and being subjected to the first preference norm.

Source: Asia Insurance Review

IRDAI directs speedy settlement of cyclone claims as losses could rise to $500m

May 10, 2019

Insurance Regulatory and Development Authority of India (IRDAI) has directed general and standalone health insurance companies to ensure that all claims of the affected insured population in the cyclone Fani ravaged Odisha and neighbouring states are surveyed immediately and the payments disbursed at the earliest. A circular from IRDAI issued by member (non-life) Sujay Banarji has said that the time taken to settle the claims should not exceed the stipulated timeline.

“There is an urgent need for the insurance industry to take immediate steps to mitigate the hardships of the affected insured population by ensuring immediate registration and settlement of eligible claims,” said Mr Banarji.

Extremely severe cyclone Fani made landfall in Odisha on 3 May

Tropical cyclone Fani made landfall on the coast of Odisha state on 3 May 2019. This powerful storm has been categorised by the India Meteorological Department as an ‘extremely severe cyclonic storm’—the equivalent of a strong category 3 hurricane on the Saffir-Simpson scale. In terms of wind speed, it was the strongest April storm to strike Odisha state.

Insurers gear up to expedite claims processing of cyclone victims

India Abroad News Service has quoted an assessment by an Indian public sector general insurance company, that the insurance claims from cyclone Fani may touch INR35bn ($500m). As the cyclone was a short period cyclone, the damages may not go up further. had earlier reported the initial losses due to cyclone likely to be in the region of INR20bn ($290m) with majority of claims expected to come from crop, property and motor portfolios.

Insurance companies are not likely to suffer major losses from cyclone Fani as insurance penetration in Odisha is quite low. Most of the properties of the middle and lower strata of the society are usually not insured.

Source: Asia Insurance Review

Insurers prepare for claims from cyclone Fani

May 07, 2019

Insurers are preparing to manage claims arising from an extremely powerful cyclone which battered the eastern Indian state of Odisha on 3 May causing extensive damage to property, vehicles, crops and the loss of at least 56 lives. According to risk modelling and data analytics firm AIR Worldwide, Fani is the equivalent of a strong Category 3 storm on the Saffir-Simpson Scale and is the strongest cyclone to make landfall in Odisha since Phailin in October 2013. Several news report have also labelled cyclone Fani as the worst storm in four decades affecting eastern India and neighbouring Bangladesh.

A large number of claims are expected for the damage of property, vehicles and hospitalisation while few claims will be for damage to crops, reported local publication The Hindu Business Line. There is also likely to be fewer life insurance claims as the state’s improved disaster-management efforts limited the number of casualties. However, several insurers note that underinsurance is a major challenge. According to research from Lloyd's and the Centre for Economics and Business Research, India was found to have an insurance penetration rate of less than 1% with the absolute cost of the insurance gap standing at $27bn.

The Insurance Regulatory and Development Authority of India is expected to issue advisories for claims processing in the cyclone-affected areas. There are no official figures regarding total insured losses arising from cyclone Fani yet.

Drawing similarities from cyclone Phailin

According to AIR, Phailin and Fani are the strongest storms to hit India since October 1999. Most recently, cyclone Hudhud made landfall near the city of Visakhapatnam in Andhra Pradesh in October 2014 causing widespread damage to property. AIR noted that cyclone Fani is a very strong storm for early May as other historic cyclones on record have all made landfall in October.

Six years ago, cyclone Phailin made landfall as a Category 4 storm on India’s east coast, killing more than 25 people and generating economic losses of an estimated $700m to $4.5bn according to local governments and Swiss Re respectively. Despite its strength, Phailin resulted in very low insured losses due to relatively few exposures in the landfall region and low insurance penetration rates.

To quantify potential losses from Phailin, AIR had conducted a study for GIC Re, the sole reinsurer in the Indian insurance market. The study revealed that insured losses were only a fraction of total economic losses due a relatively low participation for crop insurance and high proportion of uninsured residential losses in the region. The hardest hit regions also had a low insurance penetration rate.

According to AIR, residential structures in India are generally less resistant to wind and water damage compared to commercial/industrial buildings. However, India’s diverse commercial/industrial building stock continues to change as older structures are replaced with others that are engineered for wind and water resistance.

Source: Asia Insurance Review

IRDAI asks insurers to give crop insurance claim details in vernacular languages

Mar 26, 2019

The general insurers will have to provide details about crop insurance claims to farmers in vernacular languages, apart from Hindi and English, regulator Insurance Regulatory and Development Authority of India (IRDAI) has said.

The IRDAI said it has been receiving various complaints and suggestions in respect of crop insurance claims. IRDAI, in a circular, said there is a need for effective implementation of crop insurance schemes.

Insurance companies should put in place a robust system to register all the requests of individuals loss assessment, and if an individual loss assessment is rejected, a written rejection letter mentioning the reason should be sent to insured, IRDAI said.

"Insurers should ensure that all call centres/toll-free numbers responses should be available in state's official language other than Hindi and English. Wesbites of insurers should disclose crop insurance related details in the vernacular language for the benefit of farmers," it said.

Among others, widespread awareness programmes should be conducted for educating farmers on scheme guidelines, claim settlement process and grievance redressal process, it further said.

Source: Business Today

Aviation insurance losses in India at a 5-year high, touches Rs 2,500 crore

Mar 12, 2019

A series of air-crash incidents have led to insurers incurring a loss of Rs 2,500 crore in India's aviation sector. These incidents include both major and minor instances in the Indian air space.

Industry sources said the period 2014 to 2019 has been one of the worst five-years for the aviation insurance segment.

The size of the Indian aviation insurance market is estimated to be around Rs 5,000-6,000 crore.

What is aviation insurance?

Aviation insurance provides coverage for hull (aircraft) losses as well as liability for passenger injuries, environmental and third-party damage caused by aircraft accidents.

Depending on the type of company, there are various type of aviation insurance products available in the market. These include insurance for the crew members, passengers, spares (aircraft equipment), hull all risk cover for any damage to the aircraft.

For small aircraft flying passengers for business or leisure, there are niche aviation insurance covers available for loss of life and aircraft damage. Helipads are also eligible for insurance cover under this category.

Depending on the size of the cover, the premium range from 0.002 percent to 0.004 percent of the sum assured. There is a revision in annual premiums depending on the claims in the previous fiscal.

Rise in air accidents

In India, the past few incidents include damages to aircraft parts of Jet Airways and SpiceJet in separate incidents, apart from a Su-30 fighter jet crash and KingAir C-90 crash among others have led to losses of around Rs 2,500 crore.

The Sukhoi Su-30 crash in July 2018 had led to insurance losses of Rs 250 crore. New India Assurance, which is the country’s largest aviation insurer, was liable to pay the losses.

The Chennai floods in December 2015, when several aircraft and private jets belonging to companies were damaged, led to insurance losses of Rs 400 crore.

Due to a rise in the air-crashes and airline damages due to flights skidding from the runway, there has been a cumulative increase in risk rating for airlines.

At the time of renewal of insurance policies, this risk rating is taken into account. Higher the risk rating (directly proportional to past claims), greater is the insurance premium applicable. Re-insurers who provide risk cover to insurers against large risks like aviation also increase premiums when there are higher claims.


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