This year, a series of cyclones in India are leading to immense economic loss, both for people and for insurance companies. Post Phailin insurance companies both state owned and private, have been flooded with claims from various sectors, including individual households, business establishments, industry and factories.
Overwhelmed by the number of claims, the companies are struggling to find adequate number of surveyors to assess the damage to movable and immovable property.
Insurers providing weather-index or parametric insurance policies in India are facing heavy losses due to the impact of cyclones mostly on agricultural regions. Experts claim, weather-index insurance firms may see loss ratios as high as 100% due to heavy crop losses.
Phailin, the most powerful tropical storm to hit India in 14 years, triggered insurance payouts of as much as Rs.1,500 crore because of losses in crop production worth 2,500 crores.
The super cyclone in Odisha in 1999, hadcrop insurancecompanies suffer loses worth Rs.66 crore.
The biggest ever crop insurance claim came from drought-affected Gujarat last year, resulted in a payout of around Rs.3,400 crore.
Earlier, benefits were limited because of government determined premiums for crop cover. But nowadays schemes that allow insurers to determine premium based on their own risk perceptions are rolling out.
“We decide our premiums and yield insurance policies based on the historical weather data that we gather from Skymet Weather. Further, current and accurate weather forecasts of cyclones or approaching storms go a long way in helping us limit our losses, but of course only to an extent”, says, Swapnil Soni, Product Manager, Weather Insurance, ICICI Lombard.
Weather-index crop insurance schemes had performed well through most of 2013, due to average monsoon rainfalls, but the impact ofCyclone Phailinand Helen and the currentCyclone Leharhave wiped out any chance of a good performance. In some regions of coastal Odisha and Andhra, general insurance companies suffered losses up to 200%.
