The two recent disasters — Jammu and Kashmir floods and cyclone Hudhud — are likely to dent the profitability of general insurance companies in financial year 2015 due to massive destruction of property, vehicles and infrastructure in the affected regions.

Ashok Kumar Roy, Chairman and Managing Director of reinsurer General Insurance Corporation (GIC Re), said insurers were yet to send an estimate of the overall claims from the Jammu and Kashmir region. He added that claims from those affected by cyclone Hudhud will exceed the losses which the industry suffered during cyclone Phailin last year as major industrial losses are expected. Last year, coastal Andhra Pradesh and Odisha were hit by cyclone Phailin and the general insurance industry received agricultural claims exceeding ₹1,500 crore.

According to industry estimates, claims from Jammu and Kashmir and cylone Hudhud are likely to exceed ₹6,000 crore and most of the losses are likely to be borne by public sector general insurance companies.

Reinsurance rates Apart from industrial losses from Visakhapatnam, insurers are also expecting massive crop insurance losses primarily from Andhra Pradesh and Odisha.

Last year, Agricultural Insurance Corporation of India, the largest crop insurance company in the country, paid out over ₹1,200 crore after cyclone Phailin. A senior official from New India Assurance said that while reinsurance rates have been soft for insurers due to overcapacity, major losses from catastrophes may trigger a rise in reinsurance rates during renewal next year.

The insurance regulator has also asked insurers to settle claims expeditiously to help mitigate the hardships of policyholders and raised the losses required to be surveyed by a licensed surveyor to ₹50,000 from ₹20,000 for a period of two months.

Most insurers have launched special claims processing centres and dedicated helplines to help with faster settlement of claims.

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