New Delhi: As Japan suffers the jolt of a severe earthquake and tsunami, insurance companies feel the cost of catastrophic insurance for next year will move skywards. “Since most of the reinsurance treaties in India are due for renewal in April, there may be some impact on the premium rates, especially for the catastrophic cover,” KG Krishnamoorthy Rao, MD and CEO of Future Generali India Insurance, said.
A 33-foot tsunami, triggered by a powerful 8.9-magnitude quake, struck Japan on Friday, leaving huge damage to properties and reportedly killing 26 people. Although the extent of the damage is yet to be quantified, reinsurers would have to take a hit while compensating for the loss.
The reinsurers would be making up for majority of the losses. These companies usually take up the cost associated to an event when the claim to be settled is too high. “The estimation of losses will take time. This can affect a few insurers and re-insurers operating in the region,” Rao said.
The first three months of the current year saw insurance companies bearing the brunt of rising claims on account of events like floods in Australia, storms in the US and a earthquake in New Zealand. Experts also said the global reinsurers, like Munich Re or Swiss Re, might have to enhance their natural catastrophe budget for 2011.
“In terms of the Indian reinsurance market, given that there have been fortunately no major catastrophes, the reinsurers will want to take a greater share of the Indian pie and therefore the rates will be very reasonable despite this earthquake or tsunami,” Ananthanarayanan said