Premium on mega risk policies falls by up to 20%
MUMBAI: Oil rigs and aviation companies' insurance cost may fall by a fifth, following the softening of rates at reinsurers due to easing risk perception in the absence of major natural calamities or terrorist strikes.
These policies, known as mega policies, are the ones with a sum assured of more than 2,500 crore.
"Mega-risk policies are mainly reinsurance-driven. Premium rates move with global claim experiences. Not many claims have come last year," said KG Krishnamoorthy Rao, MD and CEO of Future Generali . Around 80-90% of the risk in such policies is reinsured.
Reinsurance rates across most lines of natural catastrophe have declined around the world on excess capacity and strong balance sheets of reinsurers.
Reinsurance rates depend upon two factors - claim experiences over the last one year and capacity in the market.
"Reinsurance rate depends upon demand supply. At present, there is enough capacity in the market, therefore, rates are softening," said G Srinivasan, chairman and managing director of United India Insurance .
Aviation reinsurance rates have fallen by 15% in 2010 while terrorism has seen a drop of 20%. The rates in aviation insurance segments would decrease by another 10%, said executives. General Insurance Corporation , Munich Re, Swiss Re are some of the reinsurers active in India. At present, the insurance regulator has stipulated that at least 10% of the risk has to be placed with national reinsurer GIC.
Mega risks constitute 10% of the industry's total income. This year non-life insurance companies have collected total premium of 34,507 crore during the first 10 months of the financial year.
Also, around 80% of the insurance contracts come up for renewal in April.
On the retail insurance front, policyholders are most likely to see an increase of 20-25% on motor insurance in the next six months. During the last year, insurers have lowered the discounts. Similarly, retail health insurance is likely to witness an increase in rates on medical inflation.
These policies, known as mega policies, are the ones with a sum assured of more than 2,500 crore.
"Mega-risk policies are mainly reinsurance-driven. Premium rates move with global claim experiences. Not many claims have come last year," said KG Krishnamoorthy Rao, MD and CEO of Future Generali . Around 80-90% of the risk in such policies is reinsured.
Reinsurance rates across most lines of natural catastrophe have declined around the world on excess capacity and strong balance sheets of reinsurers.
Reinsurance rates depend upon two factors - claim experiences over the last one year and capacity in the market.
"Reinsurance rate depends upon demand supply. At present, there is enough capacity in the market, therefore, rates are softening," said G Srinivasan, chairman and managing director of United India Insurance .
Aviation reinsurance rates have fallen by 15% in 2010 while terrorism has seen a drop of 20%. The rates in aviation insurance segments would decrease by another 10%, said executives. General Insurance Corporation , Munich Re, Swiss Re are some of the reinsurers active in India. At present, the insurance regulator has stipulated that at least 10% of the risk has to be placed with national reinsurer GIC.
Mega risks constitute 10% of the industry's total income. This year non-life insurance companies have collected total premium of 34,507 crore during the first 10 months of the financial year.
Also, around 80% of the insurance contracts come up for renewal in April.
On the retail insurance front, policyholders are most likely to see an increase of 20-25% on motor insurance in the next six months. During the last year, insurers have lowered the discounts. Similarly, retail health insurance is likely to witness an increase in rates on medical inflation.
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