Insurance claims from the severe flooding in the Kerala region of India in July and August, which is expected to result in economic losses of at least $3 billion, have approached Rs 2,000 crore (approximately $273.2 million), with industry sources suggesting that the payouts are more likely to hit public sector insurers over private players.
This is according to an article by moneycontrol, which notes that of the $273.2 million of gross insurance claims, so far, the majority have been from the motor insurance area, driven by the fact numerous cars and motorcycles were submerged in water for days after the flooding event.
According to industry experts, states the article, the greater hit to public sector insurers is a result of the group having a greater exposure to the Kerala and Karnataka region, which is expected to directly impact companies’ bottom line.
Tens of thousands of people have been displaced by the flooding event, and more than 300 killed, after the Kerala region experienced around 40% more rainfall than the monsoon season average just between June and August, 2018.
Previously, infrastructure and public economic losses in the Kerala region were put at roughly $2.7 billion by the Associated Chamber of Commerce and Industry of India. At the same time, it’s possible that the $3 billion economic figure could rise based on the scale of the flooding.
As discussed previously by Reinsurance News, the insurance and reinsurance sector has taken major losses from flooding in India in the past. The 2015 Chennai floods thought to have caused a Rs 5,000 crore loss (approximately $700 million), while separate flood events in Kashmir and Uttrakhand floods were thought to have cost the insurance industry around $200 million to $250 million each.
Insurance companies have been instructed to settle claims under parametric micro crop insurance policies, whose payout is linked to the weather conditions, as well as under other state-backed micro insurance schemes including life and livelihood coverages.