Property insurance premia buck trend

The increase in premium rates and higher demand post-lock-down have helped property insurance premiums grow by 36 per cent between April and July despite the overall degrowth in general insurance premiums.

The gross direct premium collected under property insurance has grown by 36.3 per cent since the beginning of the fiscal to Rs 9125 crore against Rs 6695 crore in the same period of previous fiscal. Property insurance has bucked the general trend in other segments, which have either de-grown or grown in low single digits due to the pandemic.

The growth in gross property premium is mainly due to the hike in premium rates by insurance companies this year.

In the beginning of the calendar year, reinsurer General Insurance Corporation (GIC-Re) had increased its reinsurance rates for select occupancies and later for all the occupancies it was reinsuring. “GIC-Re had been asking the general insurers to follow risk-based pricing as the premiums were lower than the burn rate derived by the Insurance Information Bureau. IIB has been collecting the data of claims and premiums for the past few years,” said R Chandrasekaran, former secretary general of General Insurance Council.

Since the de-tariffing in 2007-08, general insurers have been charging lower premium rates in order to grab business. This competition among the insurers had led to unviable rates. However, after GIC Re hiked the reinsurance rates, the premium rates too have gone up.

Further, post lock-down, several incidents of fire mishaps were reported from different parts of the country as and when the factories were opened. This has increased the demand for property insurance, said Chandrasekaran.