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Four public sector insurance companies settles 32% of claims received after flood

Jan 11, 2016

Four public sector insurance companies - United India Insurance Company Ltd, New India Assurance Company Ltd, Oriental Insurance Company Ltd and National Insurance Company Ltd - have so far settled around 32 per cent of the 19,500 claims they received from the flood affected areas of Tamil Nadu, especially Chennai.

There claims are for an estimated amount of Rs 2,518.81 crore and the insurance firms have until January 8, 2016, settled 6,237 claims by paying around Rs 104 crore, according to a senior official from an insurance company.

"We had some camps organised in the select cities and advertised in newspapers. Surveyors have been asked to give the report within five days. Once they gave the report the claim was settled within two to three days. The small claims are settled within 10 days, while major claims may require more time," said M P Jairam, deputy general manager, United India Insurance Co Ltd.

Of the total claims, around 6,573 claims for a total of estimated Rs 1,358.09 crore were received by United India Insurance, out of which the company has settled 2,287 claims for Rs 47.39 crore. The second largest number of claims were to New India Assurance, which received 5,192 claims for Rs 542.74 crore, of which 1,593 claims worth Rs 30.63 crore have been settled.

National Insurance has seen 4,825 claims for a total estimated Rs 263.43 crore, out of which the company has settled 1,691 claims for Rs 11.73 crore. The second largest in terms of amount of claims is for Oriental Insurance, which received 2,910 claims for an estimated Rs 354.55 crore, out of which 666 claims have been settled for Rs 14.51 crore. The numbers include individual and company claims.

A large number of claims were for two- and four-wheelers and some commercial vehicles, he said.

Meanwhile, various industrial associtions complained that several banks and insurance agencies are not properly extending their support to the micro, small and medium level companies to revive their business from the disaster. They alleged that many of the surveyors do not understand the technical requirements and while the critical machines are completely damaged, the claims are settled only by calculating the depreciation, which is affecting the revival plans. They also alleged that the number of claims settled are high considering the priority was on settling smaller claims such as that of two- and four-wheelers while the larger claims from the industry are still pending.

A group of micro and small units have formed a consortium and are planning to conduct a massive protest in Chennai. The micro, small and medium entrepreneurs are asking support including waiver or moratorium for various taxes, moratorium for various loans and financial support from banks, apart from addressing issues with electricity board and other government authorities related to settling the bills.

Source: Business Standard



Drones to assess crop loss under new insurance policy

Jan 11, 2016

A new agriculture insurance scheme for farmers -to be known as New Crop Insurance Scheme (NCIS) -expected to be approved by the Cabinet next week, will see drones being deployed to access crop damage figures.

The feed sent by drones will be collated with satellite imaging and remote sensing technology to assist insurance companies in adequate disbursals calculated on the basis of actual damage to crops in a particular area.Smart phones and online transmission of data will also be used in cutting down time taken to finalise the yield data.

The new scheme also aims to keep the premium rate low as compared to the existing insurance scheme where the av erage premium rate for farmers has been kept at 5.5%. The agriculture ministry in its Cabinet note proposes maximum premium up to 1.5% for wheat, 2.5% for paddy , 2% for oilseeds and 2-2.5% for other crops. Maximum premium or horticultural crops is proposed at 5%, unlike the exist ng schemes where the premium in certain cases goes up to 40%. The Cabinet, chaired by Prime Minister Narendra Modi, may even further lower the proposed premiums for all types of crops.

"We have identified discrepancies in the existing scheme of Modified National Agricultural Insurance Scheme (MNAIS) and will come out with a new crop insurance scheme, set to be implemented from 2016-17," agriculture minister Radha Mohan Singh said.

Besides the MNAIS, another scheme -Weather Based Crop Insurance Scheme (WBCIS) -has also been in operation in many parts of the country since 2007. The ministry's proposal to the Cabinet noted that though the government has been providing premium subsidy up of 75% and 50% under the MNAIS and the WBCIS respectively on actuarial premium rate, it was observed that the "premium paid by the farmers is quite high as the actuarial (exchanging risk with certainty) premium may exceed even 60%".

In order to make the NCIS scheme known to farmers in all districts, the ministry has proposed to allocate districtarea to one insurance company for a longer period of time, allowing them to build infrastructure and create a rapport with farmers of the area. Under the new scheme, the farmers will also get damages of their "post-harvest product" destroyed by cyclone or unseasonal rains up to a maximum of two weeks on "individual loss assessment basis".

Source: The Economic Times



All you need to know about the new Crop Insurance Scheme

Jan 08, 2016

Agriculture Minister Radha Mohan Singh made a presentation to Prime Minister Narendra Modi on Wednesday on the proposed new Crop Insurance Scheme. Besides premium rate, the discrepancies in the existing scheme were discussed.

The meeting was attended by Finance Minister Arun Jaitley, Home Minister Rajnath Singh, External Affairs Minister Sushma Swaraj, Food Minister Ram Vilas Paswan, Urban Development Minister Venkaiah Naidu and Road Minister Nitin Gadkari. Rural Development Minister Chaudhary Birender Singh, Tribal Affairs Minister Jual Oram, Social Justice Minister Thaawar Chand Gehlot, Chief Economic Advisor Arvind Subramanian, Niti Aayog chief among other senior officials from Finance and Agriculture Ministries were also present.

Here is all you need to know about the proposed new Crop Insurance Scheme:

The Agriculture Ministry has proposed an average premium of upto 2.5 per cent for foodgrain and oilseeds crops and 5 per cent for horticulture crops. However, some sections within the Cabinet want a uniform premium of 1-1.5 per cent for all crops.

The Centre would incur an expenditure of Rs 8,000 crore annually if a premium for farmers was fixed at 2.5 to 5 per cent depending on the risky crops and if 50 per cent of the total crop area of 194 million hectare was insured.

But fixing a uniform premium rate of 1.5 per cent for all crops for 100 per cent coverage would increase the Centre's financial burden to Rs 11,000 crore, which the Finance Ministry officials said was a major concern. The government intends to implement the scheme from the forthcoming kharif season from June.

The proposal on the new crop insurance scheme, moved by the Agriculture Ministry, was once discussed in a Cabinet meeting last year, but the decision was deferred in the wake of differences over the premium rate. In the existing Modified National Agricultural Insurance Scheme (MNAIS), the average premium rate for farmers has been kept at 5.5 per cent, though the premium rate for high risky crops is as high as 40 per cent. Last year, only 27 per cent of the crop area was insured which cost Rs 3,150 crore to the national exchequer.

Besides lower premium rate, the proposed Crop Insurance Scheme aims to settle insurance claims faster by assessing the crop damage using modern technologies like remote sensor. The Agriculture Ministry has already launched a portal on crop insurance and a mobile app as part of the digital India campaign.

Source: Business Today



Insurance companies see drop in growth for engineering segment; may see uptick in 2016

Jan 08, 2016

Engineering segment for insurance companies has seen a drop in growth owing to very few number of projects taking off. According to industry experts, there had been a 10-12 per cent drop in the premiums under fire and engineering policies. However, insurers expect an uptick in 2016.

K G Krishnamoorthy Rao, MD & CEO, Future Generali India Insurance said, "The stalled infrastructure projects would finally kick off in 2016, thereby boosting the engineering insurance sector as well."

Overall, industrial production numbers are also seeing positive signs now. Insurers have also been offering heavy discounts in insurance premium rates for the fire and engineering segment.

This segment largely covers manufacturing plants and large-scale industrial projects from fire and other risks associated with construction and maintenance. Other than manufacturing, fire and engineering policies are offered to sectors such as auto, oil & gas, power, and infrastructure.

"Since not many new projects were not coming up, there was tough competition to retain existing customers and attract those from other insurers. Now, there are signs of green shoots emergingt," said the underwriting head of a private general insurer.

According to industry insiders, after the fire and engineering segment was de-tariffed (price control was removed) in 2007, earlier in some areas there were instances of 60-70 per cent drop in rates, making the businesses un-viable.

Industrial output grew at its fastest pace in five years at 9.8 per cent in October on robust festival demand, official data showed on Friday. A four-and-a-half month high in double-digit growth in manufacturing, particularly consumer durables and capital goods, fuelled industrial production.

Industrial production, as measured by the Index of Industrial Production (IIP), grew 3.6 per cent in September and had contracted 2.6 per cent in October 2014, so the October expansion was on a low base. But, economists warned October could turn out to be a statistical aberration.

Source: Business Standard



General insurance premiums may not go up this year

Jan 07, 2016

General insurance premiums are unlikely to see a sharp rise this year due to falling global reinsurance rates.

According to industry experts, reinsurance premium rates are expected to decline this year as there have been no major catastrophes globally and also due to overcapacity in terms of capital in the market. This is despite India recording high economic losses due to the Chennai floods, which had a Rs.3,000-crore impact on the general insurance industry.

According to Aon Benfield, leading treaty reinsurance broker, for 2015 global reinsurance capacity was about $565 billion, with alternative capital making up about 12 per cent — or $69 billion — of that total.

Insurers apportion a part of their risk to re-insurers by sharing a slice of their business (premium) with the latter so that they don’t have to bear the entire loss in case of an adverse event.

K Sanath Kumar, Chairman and Managing Director of General Insurance Corporation, the country’s sole domestic re-insurer, said reinsurance rates would remain soft this year as the last year had been benign in terms of major catastrophes globally. This could lead to a decline in rates when the reinsurance contracts for Indian general insurers come up for renewals in April.

G Srinivasan, Chairman and Managing Director of New India Assurance, the country’s largest domestic general insurer, also said that he does not anticipate a hardening in reinsurance rates despite high catastrophe losses in the Indian market. This is due to the fall in re-insurance rates globally.

Global reinsurance broker, Willis Re, in its recent report, said: “Reinsurers have also faced difficult renewal dynamics in some specialty markets, with large losses and reductions in original rates not proving sufficient to dissuade further capacity from entering either the aviation or energy markets. This is leading to a prolongation of softening rates.”

Source: The Hindu Business Line



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