Yet another first week of December brought familiar scenes of rain, storms, flooding, power outages, and fallen trees. When Cyclone Michaung wreaked havoc, resulting in the heaviest rainfall in 47 years in the city, residents of Chennai drew parallels to the devastating floods of 2015. However, an initial assessment based on insurance claims data may present a more optimistic picture.
Industry sources shared data indicating a significant reduction in claims, with a 30-35 per cent decrease in motor and non-motor segments, compared to the 2015 floods. This is noteworthy considering the number of policies issued across India by general insurers (excluding standalone health insurers and specialized insurers) rose by 74 per cent in 2021-22 compared to 2014-15. Furthermore, the claim settlement process in 2023 is averaging around 50 per cent less time due to improved efficiency. Reports suggest that insurance companies incurred losses of approximately Rs 4,800 crore due to the 2015 flood claims in Chennai and surrounding areas.
Non-motor insurance encompasses home, health, travel, and liability insurances, among others. “The Michaung cyclone in 2023 saw a more proactive response from the public, with increased awareness and precautionary measures. This approach has been crucial in mitigating losses, resulting in a notable decrease of approximately 30 to 35 per cent compared to the 2015 floods,” stated T A Ramalingam, Chief Technical Officer at Bajaj Allianz General Insurance. The company noted that the current assessment is based on available data and claim intimations, with a more comprehensive picture expected as more information and reports are received.
According to Shriram General Insurance Company, the number of policies issued across India was recorded at 205.5 million in 2021-22, up from 118.2 million in 2014-15. “Rains and subsequent floods damaged many vehicles, business premises, and factories, resulting in significant infrastructural damage and business interruption,” said Shashi Kant Dahuja, Chief Underwriting Officer at Shriram General Insurance Company. He mentioned that the company’s products, such as the Standard Fire and Special Perils Policy and Fire Loss of Profit Policy (covering financial losses due to business interruption following loss or damage to insured property), are designed for such events.
In the current year, the micro-small and medium entrepreneur (MSME) industry may be the worst affected. T L Arunachalam of Bharat Re Insurance Brokers shared that the estimated damage to machinery and buildings for MSMEs in 2015 was around Rs 1,000 crore, affecting about 8,500 units. This figure has risen to Rs 3,000 crore for the sector this year. Sources at Ambattur Industrial Estate, which faced losses of around Rs 2,000 crore, suggest that the losses may impact MSME players more significantly as the majority are uninsured.
“Comparing Chennai’s situation this year with that of 2015, there has been a significant improvement. In 2015, the public faced considerable challenges in securing essential survival items, leading to delays in claim intimation and documentation for processing claims, as insurance matters were secondary to more immediate concerns. In contrast, the current scenario shows better management, with increased awareness of the insurance claims process. This enhanced awareness is expected to speed up the claim settlement process, potentially reducing the average time span by 50 per cent,” added Ramalingam.
First Published: Dec 24 2023 | 5:03 PM IST