Kerala floods: Insurance companies breathe easy due to poor coverage by Malayalees’

For the innumerable number of vehicles submerged during the deluge, comprehensive motor insurance policies cover all damages due to natural calamities like flooding.

Stranded people being evacuated and shifted to relief camps in Taurus, Tata Tippers at Thottumugham near Aluva (Photo | EPS/Melton Antony)

KOCHI: With the focus now shifting to post-relief rehabilitation, estimates of losses suffered from various quarters have started to emerge. However, insurance companies are not bracing for huge claim scenario as happened during the Chennai floods in 2015, due to Malayalees’ reluctance to take adequate insurance cover.

The damage to the housing infrastructure with nearly 1.75 lakh houses affected is pegged at Rs 8,500 crore. This could go up further if the loss of lives and damage sustained to livestock, crops and industrial goods are added. But inadequate cover could see insurance companies shoulder lower claims putting more burden on the state exchequer.

Insurance companies only expect a huge settlement from motor insurance policies. After the Chennai floods in 2015, insurance companies shelled out Rs 4,800 crore in damages. But industry sources said claims from Kerala could be way lower than this. Thomson M, a former officer of the United India Insurance Company, said the majority of Keralites still don’t have life insurance coverage.

“Life cover is taken either for tax exemption or when it is mandated by the employers. However, this is mainly restricted to the white-collar employees,” said Thomson. Various Central and state government insurance schemes only ensure bare minimum life coverage, he said. More than 380 people have died since the monsoon hit Kerala on May 29.

Less than 5 per cent of houses are insured for flood damage in Kerala

HDFC Ergo officers said less than 5 per cent of houses in the state are insured for flood damage which comes under the fire insurance policy. Similar is the case with home electronic equipment which are barely insured.

“Household policy that covers all items like TV, refrigerator, air-conditioner, microwave ovens etc has very few takers in the state,” said Shobna, an insurance officer in Kochi.

For the innumerable number of vehicles submerged during the deluge, comprehensive motor insurance policies cover all damages due to natural calamities like flooding. With estimates of close to two lakh vehicles getting affected by the floods, insurance companies expect Rs 300-400 crore of damages in this segment.

However, experts say water entering the engines is only covered if an ‘engine protection’ add-on is specified with the comprehensive insurance policy. PWD estimates the loss to civic infrastructure such as roads, bridges and buildings at Rs 4,000 crore. But all these are out of the ambit of insurance cover.

“Only under-construction infrastructure projects are insured,” Thomson said.

Crop loss

With 46,000 hectares of farmland affected, an estimated loss of crops and agricultural produce could run up to Rs 1,000 crore. But various crop insurance schemes like National Crop Insurance Scheme may only bear a small percentage of the total loss, industry experts said.

They do not see a huge claim for the loss of livestock as only a negligible per cent is insured under various cooperative societies. Traders’ losses estimated at Rs 500 crore, are also mainly devoid of insurance coverage.

Rs 300-400 cr damages expected by Insurance companies in the vehicle segment.