Page 9 - Insurance Times February 2024

On the other hand, the claim settle- is similar to 2022 and the average of ers recording ratios beneath the regu-
ment process is taking an average of the previous five years, but above 10- latory threshold.
around 50 per cent less time in 2023 year and 30-year trends. IRDAI stipulates a minimum solvency
due to efficiency in the system. North America once again accounted ratio of 150 per cent for insurance
for a big portion of the losses, though companies emphasising the impor-
Quakes, storms cost $95 the hurricane season was relatively tance of a higher ratio for ensuring the
billion in insurance losses mild. insurer's capacity to meet its liabilities.

last year Scientists have said that a warming of In 2022, the government injected Rs.
the Earth's atmosphere will cause 5,000 crore capital into three insurers
Earthquakes in Turkey and Syria, more damage in the decades ahead. - National Insurance Company Ltd, Ori-
storms in the United States and other ental Insurance Company Ltd, and
natural disasters caused an estimated Insurers have in some cases been rais- United India Insurance Company.
$95 billion in insured losses in 2023, ing the rates they charge as a result This strategic move was part of the
down from the previous year but still of the increasing likelihood of disasters, government's playbook, acknowledging
above the long-term average, Munich and in some places have stopped pro- the challenges posed by the unprec-
Re said. viding coverage.
edented pandemic. Notably, the Budget
The tally of losses from natural catas- for 2023-24 does not allocate funds for
trophes covered by insurance is less PSU general insurers need capital infusion into insurance companies.
than the $125 billion recorded in 2022 to turn around Earlier this year, three PSU general in-
and is also lower than an estimate of In its latest Financial Stability Report, surers (excluding New India) were es-
$100 billion published last month by ri- the Reserve Bank of India noted that timated by an ICRA report, to require
val Swiss Re. three stateowned insurance compa- a substantial Rs. 17,000 crore to meet
But the 2023 figure from Munich Re, nies are not meeting regulatory sol- solvency criteria. The preceding year
the world's largest reinsurer, is above vency requirements. Within the public witnessed an upturn in underwriting
a 10-year average of $90 billion and sector nonlife insurers' group, the sol- losses for public sector insurers, attrib-
well above a 30-year average of $57 vency ratio falls below the desired uted to wage revisions and the settle-
billion. level, with three out of four PSU insur- ment of associated arrears.
The quakes in Turkey and Syria were
the most destructive events, causing No claims yet, but insurance cost may rise if tensions
58,000 deaths, $50 billion in overall grow
losses and $5.5 billion in losses covered
Indian insurers expect to see a rise in marine insurance costs if the crisis
by insurance.
faced by cargo vessels in the Red Sea escalates. However, they consider the
But what stood out in 2023, Munich Re present situation to be under control and have yet to receive any demand
said, were not single big events but the for claims.
numerous severe regional storms in the "In case of a rise in incidents similar to the Indian oil tanker attack in the
United States and Europe which are Red Sea (last month), there will be an increment in insurance costs for all
increasing as a result of climate
cargo journeys made via the Red Sea," said Parthanil Ghosh, president, re-
change.
tail business, HDFC ERGO General Insurance.
"The background noise has become
According to him, an increased frequency of such incidents will lead to
louder. Loss events that were previ-
greater demand for kidnap and ransom covers.
ously regarded as secondary and ac-
knowledged as less significant 'side "Besides, it has been observed earlier that cargo ships alter their transit
routes as a measure to thwart such possible attacks, thereby leading to in-
risks' have become a major loss driver,"
creased costs in transportation and in turn, insurance," Ghosh Said.
Ernst Rauch, chief climate scientist at
Munich Re, told Reuters. Echoing him, Deepak Prinjha, Chief Technical Officer of Roay Sundaram
General Insurance, said, "Currently, the situation is manageable within the
Total losses from natural catastrophes,
insurance/reinsurance industry and every company has adopted a wait-and-
including those not covered by insur-
ance, were $250 billion in 2023. That see strategy. Also, claims are yet to be reported."

The Insurance Times February 2024 9