Home insurances might rise up
Although cities like Chennai recently witnessed buildings getting damaged in fire, general insurers are not keen on revising premium rates upwards. While there is a subsequent hike in premiums in the following year if the insurer has experienced an adverse claim from a particular establishment in the last 12 months, insurers are not resorting to blanket premium revisions.
Insurance is a cyclical business. When losses exceed premiums received, only then do insurers resort to upward revision of the premium. In case of fire insurance, the rates are soft at the moment with many insurers continuing to resort to heavy discounting on premiums as said by Milind Kharat, who is the chairman and managing director of the Chennai-headquartered United India Insurance, said. Currently, the claims ratio in the fire insurance is 80 percent.
A claims ratio over 100 percent indicates the company is paying more in claims than it is getting in premiums. Also, post the survey of fire insurance rates in 2007, rates in fire insurance have been on the downward side. There is still huge potential untapped in terms of fire insurance. And with increased competition, everyone is looking to get good business by quoting attractive rates as Kharat added.
Source: Times of India
