Now premiums for property cover may have to be paid on the basis of previous claims, the cost of insurance may increase, know why – insurance cost for high risk properties to go up

New Delhi: Now the insurance cost of high risk properties is going to increase. This is because insurance companies are apprehensive of increasing rates for such properties in the reinsurance markets. Most of the major insurance covers are revised with the beginning of the financial year which is as per the policies starting from 1st April. According to a report in The Times of India, for the first time, several non-life insurance companies have decided to link the price of fire insurance policies with individual claims experience. According to industry sources, these changes are coming after the regulator’s directive that there is no compulsion to accept the rates published by the Insurance Information Bureau as the minimum rate.

Linking the insurance rate to the track record of the policyholder helps companies offer discounts to more and more customers. This is because property insurance claims are less in comparison to motor or health insurance. However, the rate of policy being decided on the basis of claim experience is nothing short of bad news for people who have made huge claims in the last three years. Insurance companies are going to double the rates for those who have claimed more than three times the premium paid.

A businessman whose industrial policy is due for renewal said, “The cost of insurance should not be linked to the claims, because in fire insurance if a policyholder has not made any claim for the last 30 years and made a claim last year, his The premium will increase. According to him, the insurance companies are working in collusion.

A spokesperson for the General Insurance Council, an association of non-life companies, strongly denied that the organization had given any direction on pricing.

An industry official said the decision to link price to claims experience is positive as premium rates will be lower for good risks. “Earlier, all ricks, good and bad, had to pay the same premium,” he said.

The sector of fire insurance has witnessed fierce competition among insurance companies after the removal of government intervention in fixing premiums. This happened soon after liberalisation. The share of fire insurance dropped from 25% to 10%.