Severe flooding in the Kerala region of India is now expected to drive economic losses of at least US $3 billion, while the toll for the insurance industry is anticipated to rise.
Kerala, India flooding – Image by Kaviyoor Santoosh via BBC
Based on the scale of the flooding and the still developing catastrophe in the Kerala region this estimate could be on the low side, but they provide a view of the expected impact to the country and as a result insurers operating there.
Infrastructure and public economic losses in the Kerala region were put at approximately US $2.7 billion by the Associated Chamber of Commerce and Industry of India.
Insurers are expected to shoulder claims from damage to property and contents, autos and crops, as well as some commercial claims in the affected areas.
Insurers 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.
General and life insurers are anticipated to face claims of up to US $100 million (currently estimated at between $70m and $75m), while claims are also expected from commercial property, crop and other lines. In total there have been estimations of insurance industry losses somewhere in the region of US $250 million to US $500 million.
The Insurance Regulatory and Development Authority of India (IRDAI) has issued a statement asking insurers to settle claims quickly to help in the recovery from the flooding.
Tens of thousands of people have been displaced by the flooding and more than 300 killed, after Kerala received roughly 40% more rainfall than the monsoon season average just between June and August.
The insurance sector has taken major losses from flooding in India before, with the 2015 Chennai floods thought to have caused a Rs 5,000 crore loss (roughly US $700m), while separate flood events in Kashmir and Uttrakhand floods were thought to have cost the insurance industry around $200m to $250m each.
