KUALA LUMPUR, Sept 18 (Bernama) -- Flooding in the Indian state of Kerala will not have a significant impact on the balance sheet strength of rated Indian non-life insurers.
However, the losses may add to the unfavorable underwriting performance that A.M. Best has flagged as a negative rating factor for some of these insurers.
A.M. Best -- a global rating agency and information provider with a unique focus on the insurance industry -- stated a statement in a new Best’s Briefing titled, “Kerala Floods: Limited Impact on Rated Insurers’ Capital, May Add to Performance Issues”.
A.M. Best notes that Kerala represents a significantly smaller portion of the Indian non-life market and its rated insurers’ overall gross premiums. Insurance penetration in India is low and insurance penetration in Kerala is estimated to be below the national average.
The cumulative rainfall this year during the 2018 summer monsoon period in Kerala was significantly higher than normal and together with the release of waters from dams, have created severe flooding in the region.
Motor own damage is one of the leading sources of business, accounting for 30 per cent of gross premiums in the state while four large insurers with estimation of 70 per cent Kerala’s gross non-life premiums in 2017, are likely to absorb the majority of claims.
The affected insurers rated by A.M. Best are expected to have adequate reinsurance protection, with deductibles that are small percentages of their premium base and capital sizes.
The agency will continue to closely monitor developments at its rated insurers as more information becomes available on the ultimate gross and net impact of the floods on their profitability. More details at www.ambest.com.
-- BERNAMA
-- BERNAMA
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