Insurance companies encash fear of flood
The deluge of 26/7 may have caused havoc in Mumbai, but the fear of its repeat has meant big bucks for insurance companies, report Aditya Ghosh & Suman Layak.india Updated: Jun 17, 2007 02:33 IST
The deluge of 26/7 may have caused havoc in Mumbai, but the fear of its repeat has meant big bucks for insurance companies.
Industry sources estimate that insurance companies will this year cover Rs 3,000 crore worth of assets, a rise of at least Rs 500 crore over last year.
It will achieve these targets on the back of advertising issued by the General Insurance Council, the apex body of general insurance companies, that shows what damage floods can cause.
But the state government isn’t impressed with what it calls “commercial exploitation” of the worst natural disaster Mumbai has seen. It believes the ads will lead to unnecessary panic. So concerned is the administration that it has threatened to take legal action against the campaigns.
“This is a serious matter and we are consulting legal experts. People cannot be misled by business interests looking to cash in on disasters like 26/7,” state Chief Secretary Johny Joseph told HT.
Action was taken last year, as well as in 2005, against many for spreading rumours of flooding. Now, the government might decide to invoke the same laws against insurers, said senior officials on condition of anonymity.
Insurance companies who launched flood and inundation policies following 26/7, immediately recording a 30 per cent rise in sales defended the advertisements.
“It’s our job to tell people about the insurance. If people feel the state has done enough, they will not buy it,” KN Bhandari, secretary general of the General Insurance Council, said.
He pointed out that only 10 per cent of the losses caused by 26/7 were covered by insurance (Rs 1,500 crore was paid in flood claims). This year, insurance companies believe, more people should come under their safety net.