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Thursday, March 7, 2013

Non-life insurers plan disaster fund In Talks With NDMA, Most Affected States To Provide Catastrophe Covers

Mumbai: Non-life insurers are working on a catastrophic fund to provide relief to victims of natural calamities such as cyclone, floods, earthquake and tsunami. Insurers are in talks with the National Disaster Management Authority (NDMA) and state governments to set up a fund that will take care of providing immediate relief to victims. 
    "At present, authorities clear the relief package after the disaster. A catastrophe insurance will ensure that, rather than wait for relief, the cover will provide predefined compensation to the victims," said G Srinivasan, chairman, New India Assurance. "I have recently met with the chief minister of Orissa state and put for
ward the proposal of a catastrophe cover." 
    He added that the cover would have a pool structure in which, besidesinsurance companies, the NDMA could also make its fund available. 
    "Insurance companies can provide a layer of support and get support from
reinsurers. The government can also chip in," said Srinivasan. 
    Insurers say that the cover could be either designed separately with state government or there could be a central pool for all states. In India, states like Orissa and Andhra on the East Coast and 
Gujarat on the West have been regularly affected by disasters. The Himalayan states have also been affected by earthquakes in the past. 
    According to Swiss Re, economic losses from natural catastrophes and man-made disasters may reach at least $140 billion in 2012. The world
disaster claims are largely from the United States which dominates every year because of hurricanes on the East coast. Of the economic losses of $140 billion, over $65 billion is likely to be borne by reinsurers. This means that the cost of the claims is spread around companies across the world. 
    Although natural disasters in India rank among the highest in terms of human casualties, there is hardly any impact on the insurance industry because the worst affected are the poor with little assets and no insurance
    Most of the countries that are frequently subject to natural disasters, such as US on the Gulf coast and Japan, have their own insurance programmes to cover such disasters. 

Immediate accident cover for AP highway victims on anvil 
Mumbai: State-owned insurance companies, led by the GeneralInsurance Council (GIC), are finalizing an assistance programme to provide immediate relief to victims of highway accidents in Andhra Pradesh. "This is a pilot project and it is in the process of being finalized in AP," said G Srinivasan, chairman, New India Assurance. He added that the aim is to provide relief to accident victims by rushing them to hospitals and it was too early to draw conclusions whether it will be of great assistance to theinsurance industry. 
    The project is being implemented by GIC, the association of all non-life insurers, under the aegis of the Insurance Regulatory and Development Authority. The council is appointing a service provider which will have a team for highway assistance. According to Srinivasan, such a project could also help insurance companies in managing their third-party liability business which provides compensation to accident victims. "Once we have saved lives, we can collect information about the accident and settle claims immediately," said Srinivasan. TNN


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