Insured losses due to natural disasters have plummeted to Rs 17,000 crore in the past three years in India. However, with a spate of floods across north and east India this financial year, losses are likely to increase.
The monthly Global Catastrophe Recap report by Aon Benfield said the economic cost of global flood events is expected to exceed $5 billion (Rs 33,650 crore) in June alone. Aon Benfield is the global reinsurance intermediary and capital advisor of Aon.
In India, days of torrential rainfall prompted significant flash floods, and rivers overflowed banks in Uttarakhand from June 25 to July 1.
At least 55 people were either dead or missing. Some of the hardest-hit areas were in Chamoli and Pithoragarh districts after cloudbursts caused floods devastating 10 villages.
In all, thousands of homes were flooded. The report added total economic losses are expected to run into millions of dollars.
During the past financial year, insurers faced claims of almost Rs 5,000 crore from flood-hit Tamil Nadu and Puducherry.
State-owned insurers, including United India Insurance, were the worst-hit because of these incidents which led to heavy loss of lives and properties.
Insurance sector officials said the absence of any risk- mitigation tools like catastrophe bonds or natural disaster pools, have led to losses being directly borne by the companies.
While there was a proposal to have a natural catastrophe pool in the country to deal with losses from natural disasters, a consensus is yet to be formed on the the issue.
High-risk segments like terrorism and nuclear energy already have insurance pools. A pool similar to this had been proposed for the catastrophes like flood, earthquakes, landslides and storms, where all insurance companies would contribute to the corpus.
In its Global Catastrophe Recap: First Half of 2016 report, which evaluates the impact of the natural disaster events that occurred worldwide in the first six months of the year, Impact Forecasting said for the first half of 2016, preliminary global economic losses reached $98 billion (about Rs 6.59 lakh crore) and global insured losses Rs 30 billion (Rs 2.01 lakh crore), which were their highest levels since 2011, still slightly below their 10-year averages of $112 billion (Rs 7.53 lakh crore) and $31 billion (Rs 2.08 lakh crore), respectively.
During the last three years, floods have caused maximum damages, both with respect to economic costs and insured losses.
In Uttarakhand, flash floods had led to almost Rs 3,000-3,500 crore losses in 2013. Most of it was related to projects as well as motor insurance.
In 2014, cyclone HudHud had hit Andhra Pradesh and Odisha and that led to losses of about Rs 4,000 crore.
Curated from An insurance pool to cover natural disasters?