Indian insurance market will feel the jitters of the Japan earthquake with reinsurace rates expected to harden in the international market. The quake and tsunami struck Japan at a time when most Indian insurers are renewing their treaties with global reinsurance players who take over a large part of the risk from the books of underwritters. The extent of damage is yet to be ascertained but industry officials fear large claims from Japan. The reinsurance market was largely unaffected by recent catastrophes like flood in Australia and earthquake in New Zealand but the disaster in Japan could push up rates.
Dhananjay Date, MD, Swiss Re Services said: "Swiss Re has a loss of $800 million for the New Zealand quakes. Munich Re has also suffered substantial loss. Although loss data for Japan is yet to come, initial aerial view of casualties make us believe it will be substantial. We will get a fair view of the losses once the stock markets open and it will definitely have a hardening effect on global reinsurance rates."
While it will also have its effect on India, the rise in rates may not be as high as in countries where catastrophes have hit. "I believe, rates will harden by about 10% in India which has a major loss for the last five years," he said.
Earthquake risk is inbuilt in most life and non-life policies unless these are specifically excluded. Non-life covers provide for insurance against accidental death or injury and hospitalisation benefit for treatment of accidental injury under mediclaim.
"This is one of the biggest catastrophic hit. Treaties, which are under negotiations, will see impact as markets will harden," said Gaurav Garg MD and CEO Tata AIG General Insurance Company.
