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07-13-2013, 04:44 AM #1
Rupee fall may push up travel insurance premiums
The falling rupee is likely to increase the cost of general insurers by an average 8-10 per cent in settling travel claims, according to industry players.
They said this may also have some impact on the marine insurance claims though that depends on the nature of shipments and clients' geography and that the impact will be higher if the rupee continues to fall for a longer period.
"Claims from travel insurance segment is expected to go up by 8-10 per cent for the industry due to fall in the rupee," Reliance General Insurance Chief Executive Rakesh Jain said.
He said impact on marine insurance will depend on the client profile along with the nature of shipment.
The rupee has depreciated by over 12 per cent against the dollar since the beginning of the fiscal. The Indian unit hit a lifetime low of Rs 61.21 a dollar earlier on Wednesday, forcing the central bank and capital markets regulator Sebi to take unconventional measures to arrest the slide.
Another official from a private general insurer said claims from travel insurance would be higher, especially for those arising out from hospitalisation.
"In travel insurance, most claim settlements happen in dollars. Due to the rupee fall in the past few days, the claims in travel insurance are certain to be high," said Renuka Kanvinde, Assistant Vice-President (Health and Travel Insurance) Bajaj, Allianz General Insurance.
She said hospitalisation claims, which form the major chunk of overseas travel insurance, will definitely be higher due to the prevailing volatility in the rupee.
Bharti Axa General Insurance Chief Executive Amarnath Ananthanarayanan said the rupee fall will definitely increase the claim cost in marine insurance segment.
"As the rupee falls, exports are likely to be higher. So, general insurers will enter into marine insurance contract with exporters. Due to the fall in rupee, the claims arising out from marine insurance are likely to be higher," Ananthanarayanan said.
He said companies will be absorbing the rise in claims as of now instead of hiking the premium to compensate the higher outgo.