Flood in­sur­ance yet to gain pop­u­lar­ity in In­dia

S. Vish­wanathan, head - Com­mer­cial Lines Un­der­writ­ing, SBI Gen­eral In­sur­ance, shares de­tails about the trends in flood in­sur­ance busi­ness in In­dia:

Banking Frontiers - - Insurance - ravi@glo­cal­in­fo­mart.com

Dr Ravi Lal­wani: In­dia has wit­nessed floods in dif­fer­ent parts of the coun­try. How is the flood in­sur­ance busi­ness this year com­pared to the pre­vi­ous years?

S. Vish­wanathan: Flood­ing af­fects more peo­ple world­wide than any other form of nat­u­ral dis­as­ter. Un­for­tu­nately, in­sur­ance cover for the risk of flood­ing is not wide­spread. Over the last few years, flood­ing has af­fected var­i­ous cities, town­ships and ru­ral parts of In­dia. Flood in­sur­ance forms part of the Stan­dard Fire and Spe­cial Per­ils (SFSP) in­sur­ance cover in In­dia and the fire port­fo­lio has grown by 20% in FY 18-19, which is also the growth per­cent­age for flood in­sur­ance busi­ness.

What is the size of the flood in­sur­ance busi­ness in In­dia? And what is your com­pany’s share in it?

Flood cover is a pack­age of mul­ti­ple cov­ers like storm, tem­pest, flood and in­un­da­tion (nomen­cla­ture STFI). Flood in­sur­ance is not sold as a stand­alone cover in In­dia. It is rather of­fered as a bun­dled cover un­der that Stan­dard Fire and Spe­cial Per­ils In­sur­ance (SFSP). Cus­tomers are given a choice to opt out of the flood cover. It is, how­ever, sel­dom ex­er­cised by them. Con­sid­er­ing this as­pect, the gen­eral in­sur­ance in­dus­try fire busi­ness (In­clud­ing STFI Peril) for FY 17-18 is around Rs108 bil­lion and SBIG has con­trib­uted roughly Rs8­bil­lion (7.4%) to this port­fo­lio.

Please share some de­tails about your flood in­sur­ance prod­ucts.

We of­fer flood cover through var­i­ous prod­ucts such as stan­dard fire, in­dus­trial all risks, busi­ness pack­ages, SME pack­age – pre-un­der­writ­ten, sim­ple home pack­age and long-term home pack­age.

What is the pro­file of the most com­mon re­tail cus­tomers? SME cus­tomers?

The pro­file for re­tail cus­tomers is pri­mar­ily res­i­den­tial risks and the prod­ucts sold are sim­ple home pack­age and longterm home prod­uct linked to the home loan seg­ment of the bank. The pro­file also in­cludes SME man­u­fac­tur­ing and shop risks, catered by the SFSP and busi­ness pack­age prod­ucts. These prod­ucts pro­vide flood dam­age cover to both the struc­ture as well as con­tents.

From which parts of the coun­try do you get ma­jor­ity of de­mand for flood in­sur­ance?

The In­dian states of West Ben­gal, Orissa, Andhra Pradesh, Ker­ala, As­sam, Bi­har, Gu­jrat, Ut­tar Pradesh, Haryana and Pun­jab are flood prone gen­er­ally. East­ern coast of In­dia, parts of Gangetic basin and parts of the western coast are most prone to flood­ing. This stands even more true of late as due to rapid real es­tate de­vel­op­ment and in­ad­e­quate drainage sys­tems in ma­jor cities, there is a re­cur­rence of flood­ing in­ci­dents al­most ev­ery year within city / town premises as well.

Which tech­nolo­gies are be­ing used for in­spec­tion of flood in­sur­ance claims?

Nat­u­ral calami­ties such as flood and in­un­da­tion bring in its wake many in­sur­ance claims as such events af­fect a sig­nif­i­cant num­ber of peo­ple in a geo­graphic ter­ri­tory. Such large scale claims due to a nat­u­ral dis­as­ter are nor­mally treated as cat­a­strophic loss claims with sim­pli­fied claim pro­ce­dure and re­duced num­ber of doc­u­men­tary ev­i­dence for speedy set­tle­ment. For this a fast track claim set­tle­ment process has been de­vised wherein in­stead of phys­i­cal dis­patch of doc­u­ments for claim pro­cess­ing, the same are scanned and sub­mit­ted by mail and up­loaded on a com­mon drive by the loss as­ses­sors and claim han­dlers.

What are the most com­mon frauds in flood in­sur­ance? How do you tackle such frauds?

The ne­ces­sity for prompt set­tle­ment of such claims with a cur­tailed list of doc­u­ment re­quire­ment, as out­lined above, at times may lead to fraud­u­lent claimants as cus­tomers lodge fic­ti­tious claims in the names of those who have not ac­tu­ally suf­fered any loss in the flood. Some­times, op­por­tunis­tic cus­tomers also may lodge such claims. How­ever, at our end, we nip such frauds in the bud by as­cer­tain­ing iden­tity de­tails of ev­ery claimant and the gen­uine­ness of the claims through pro­fes­sional loss in­ves­ti­ga­tors.

What are the ma­jor dif­fer­ences be­tween flood in­sur­ance in In­dia and abroad?

Non-life in­sur­ance pen­e­tra­tion in In­dia is only 0.77% of GDP as against global av­er­age of 2.82%. Flood cover is op­tional un­der prop­erty insurances and with such lower pen­e­tra­tion lev­els, there is a glar­ing prob­lem of in­ad­e­quate cover­age. Hence, in the event of any ma­jor dis­as­ter, the govern­ment must step in to pro­vide fi­nan­cial as­sis­tance to af­fected peo­ple (eg - Prime Min­is­ter’s Re­lief Fund). Al­most all de­vel­oped coun­tries have adopted some form of bun­dled sys­tem, where catas­tro­phe risk cover­age (in­clud­ing flood) is at­tached to home­owner’s or fire in­sur­ance. Most of the coun­tries abroad also get con­tri­bu­tions from dis­as­ter re­lief funds spon­sored by the govern­ment.

S. Vish­wanathan

Newspapers in English

Newspapers from India

© PressReader. All rights reserved.