A deluge of claims awaiting insurance companies

From damaging automobiles, flooding properties to ripping portions of roads, the havoc wreaked by torrential rain in Hyderabad and its suburbs is set to flood general insurance companies with claims in the days ahead.

They have begun in the form of motor claims, said sources in insurance industry, estimating property damage claims arising from the downpour to be around ₹500 crore. In case of a flood-like scenario, two lines of business that get impacted are motor and property insurance. Stating this, Bajaj Allianz General Insurance Chief Technical Officer T.A. Ramalingam said the number of motor claims are bound to be relatively high and have started coming. “We expect a couple of more days’ time before we get the full impact of the number of claims [as some areas are still waterlogged],” he said.

The cost of repairs of automobiles, especially new generation vehicles equipped with electronics, is likely to be an expensive affair. While that is an issue for vehicle owners and how much own damage insurance have they opted, for the automobile service sector the challenge is to handle the increase in the number of vehicles. At the over 50 authorised Maruti Suzuki service centres, the emphasis is on expediting the turnaround, according to a senior executive of the company’s service division.

Severely damaged cars, however, require more time to be brought back to running condition, especially those that remained under water for more than 24 hours. Besides authorised centres, a number of private multi-brand garages also are witnessing increase in the number of vehicles coming for repairs following the rain. Bal Reddy of S.K. Motors Bosch Car Service in ECIL said his workshop is receiving 3-4 rain rain impacted cars every day. According to him, workshops in some areas remain shut because of water logging.

Most of the cars damaged are those parked on the road, he says, adding there also are likely to be cases where the cost of repairs will be more than the resale value. Not all service centres are willing to undertake repairs on such cars as it is a time-consuming process, sometimes requiring a couple of months. Senior surveyor P. Sowjanya Kumar said the insurance industry is estimating ₹500 crore of property damage in the rain. “Usually the reported claims are high, but the net will be less as the insured’s psychology is to report everything as damaged,” he said.

Noting that many claims were being reported, he said roads also form part of insurance and are covered, by the road contractors, under operational policy. A clear picture on claims will take sometime. Reliance General Insurance ED and CEO Rakesh Jain said, “We have received 150 motor insurance claims and 21 commercial claim intimations. It is too early to determine the actual count and quantum of claims, as claims related to MSMEs start flowing 10 days after occurrence of the event. Going by the magnitude of the flood and property impacted, the actual claim numbers are expected to be high and we will be able to assess the situation fully only once the flood water recedes.”

Source: The Hindu