Companies in a number of Indian industries have seen their property insurance rates soar by as much as eight times after the country’s only active domestic insurance, GIC Re, revised the rates at which it provides reinsurance.
This is according to reports from The Times of India, who said that corporates in sectors such as pharma, textiles and steel had been hit by the rate hikes.
GIC Re has justified the higher costs, claiming that premium still only matches claims in eight of the sectors where it has revised its rates.
The new pricing regime was announced on February 21 and came into effect from March 1. Risk managers complained that this did not allow them enough time to sort out their insurance purchases.
“We have seen our premium gone up by six times, Raymond Group CFO Sanjay Bahl told The Times of India.
“This is unfair as our claim ratio does not justify it. If the premium hike is aimed at correcting losses that are happening elsewhere, why should good clients pay higher rates?”
Industry associations have appealed to regulators following the rate hikes, and some companies are seeking legal opinion, according to reports.
GIC officials argued that the correction was overdue as its portfolio has been generating underwriting losses since de-tariffing in 2007, with rates falling by as much as 99%.
“The domestic fire treaties for GIC Re have been running at a combined ratio of 100% consistently for the last few years,” The Times of India quoted a spokesperson as saying. “Hence, some urgent remedial measures had to be undertaken.”