Insurance claims drop 30-35% during Chennai floods compared to 2015

Yet another first week of December brought familiar scenes of rain, storm, flooding, power outages, and fallen trees.

When Cyclone Michaung wreaked havoc, leading to the heaviest rainfall in 47 years in the city, residents of Chennai drew parallels to the devastating floods of 2015.

However, initial data on insurance claims suggests that the impact this time may portray a more optimistic scenario.

According to data shared by industry sources, the proactive response from both authorities and the public contributed to a significant reduction in claims, with a 30-35 per cent decrease in motor and non-motor insurance, compared to the 2015 floods.

This is despite the number of policies issued across India by general insurers (other than standalone health insurers and specialised insurers) increasing 74 per cent in 2021-22 compared to 2014-15.

On the other hand, the claim settlement process is taking an average of around 50 per cent less time in 2023 due to efficiency in the system.

According to reports, insurance companies took a hit of around Rs 4,800 crore due to the claims of the 2015 floods in Chennai and nearby areas.

Non-motor insurance includes home, health, travel, and liability insurances, among others.

The Michaung cyclone in 2023 saw a more proactive response from the public, with heightened awareness and precautionary measures.

This proactive approach has played a crucial role in mitigating the impact of losses, resulting in a decrease of approximately 30 to 35 per cent compared to the devastating floods of 2015,  said TA Ramalingam, chief technical officer, Bajaj Allianz General Insurance.

The company added that the current assessment is based on the available data and claim intimations.

With more information and claim reports in the coming days, a more comprehensive picture will emerge, it said.

According to Shriram General Insurance Company, the number of policies issued across India was seen at 205.5 million in 2021-22, compared to 118.2 million in 2014-15.

Rains and the consequent floods damaged many vehicles, business premises and factories.

It not only resulted in infrastructural damages but also caused business interruption significantly,  said Shashi Kant Dahuja, chief underwriting officer, Shriram General Insurance Company.

He added the company s products like Standard Fire and Special Perils Policy and Fire Loss of Profit are specially designed for such occasions.

During the current year, the worst affected may be the micro-small and medium enterprise (MSME) sector.

According to data shared by T L Arunachalam of Bharat Re Insurance Brokers, the value of damage by machinery and building was Rs 1,000 crore for MSMEs in 2015, with around 8,500 units getting affected.

This has increased to Rs 3,000 crore for the sector this year.

According to sources at Ambattur Industrial Estate, which suffered losses to the tune of around Rs 2,000 crore, this may affect the MSME players more as the majority of them are not insured.

Comparing the current year s situation in Chennai with that of 2015, there has been a significant improvement. In 2015, the public faced substantial challenges in securing survival essentials, leading to delays in claim intimation and documentation for processing claims.

This is because insurance matters took a backseat amid more immediate concerns.

In contrast, the present scenario exhibits better control, with heightened awareness regarding the insurance claims process.

This increased awareness is poised to expedite the claim settlement process, projecting a 50 per cent reduction in the average time span,  said Ramalingam.