Disasters down under may raise reinsurance premiums]
KOLKATA: Flood in Australia and quakes in New Zealand may lead to increased reinsurance premiums for Indian general firms during the renewal season, slated to start from April. The size of the reinsurance market that gets placed abroad is about Rs 3,000-3 ,500 crore.
Large reinsurers such as Munich Re and Swiss Re, and Lloyds have taken substantial hit from casualties arising out of the two catastrophes . They now want to factor that in their risk-profiling while offering covers to general insurers in India and the world over.
This may lead to higher premiums for Indian corporates renewing their covers. "Preliminary talks between reinsurers and general-cover companies indicate the reinsurance premium charged will consider global national catastrophes and that will raise premiums to some extent," a senior Munich Re official told ET. However, the Indian insurance market has not witnessed any national disaster till now in the current financial year. "This means insurers will in turn try and bargain for reduced premiums .
But, there are certain reinsurers operating in India, which did not have any exposure either in Australia or New Zealand. These companies would possibly not ask for increased premiums," he said. Established general insurers are also aiming at increasing their retention limits - the amount of the insurance that an insurer retains is the retention limit (aka net retention), and the amount that is ceded to the reinsurer is the cession.
"Alternatively, there are also instances where the reinsurers would be insisting on higher retention to increase the reinsured stake on the risk underwritten by them as a measure to increase the quality of underwriting, and to reduce their exposure," Rajeev Singh, head - reinsurance at Bajaj Allianz General Insurance said.
Large reinsurers such as Munich Re and Swiss Re, and Lloyds have taken substantial hit from casualties arising out of the two catastrophes . They now want to factor that in their risk-profiling while offering covers to general insurers in India and the world over.
This may lead to higher premiums for Indian corporates renewing their covers. "Preliminary talks between reinsurers and general-cover companies indicate the reinsurance premium charged will consider global national catastrophes and that will raise premiums to some extent," a senior Munich Re official told ET. However, the Indian insurance market has not witnessed any national disaster till now in the current financial year. "This means insurers will in turn try and bargain for reduced premiums .
But, there are certain reinsurers operating in India, which did not have any exposure either in Australia or New Zealand. These companies would possibly not ask for increased premiums," he said. Established general insurers are also aiming at increasing their retention limits - the amount of the insurance that an insurer retains is the retention limit (aka net retention), and the amount that is ceded to the reinsurer is the cession.
"Alternatively, there are also instances where the reinsurers would be insisting on higher retention to increase the reinsured stake on the risk underwritten by them as a measure to increase the quality of underwriting, and to reduce their exposure," Rajeev Singh, head - reinsurance at Bajaj Allianz General Insurance said.
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