Cyclone Phailin may impact life, property

Cyclone Phailin may impact life, property - Sakshi Post

Super cyclone Phailin, which is expected to hit the coast of Odisha and Andhra Pradesh in the next few hours, may have an impact on life, crops and property in those regions. Insurance companies officials said that operating plants of energy and oil/gas companies are adequately covered.

“While our estimates suggest that some life may be covered, property and houses are poorly insured. Hence, if the intensity of the cyclone is high, there could be some impact,” said a senior official of a public general insurer. The official explained that though power plants in and around Paradip Port could also be affected; almost all of them are insured against natural disasters. About one lakh people have been evacuated from the cyclone-prone areas of Odisha.
The bulletin issued by the Indian Meteorological Department (IMD) at 8.00 am today said that the very severe cyclonic storm Phailin over west-central & adjoining east-central Bay of Bengal moved north-westwards during past 6 hours with a speed of 15 kilometres per hour (kmph) and lay centred at 5.30 am today.
“It would move north-westwards and cross north Andhra Pradesh and Odisha coasts between Kalingapatnam and Paradip, close to Gopalpur (Odisha) by evening of today, as a very severe cyclonic storm with a maximum sustained wind speed of 210-220 kmph gusting to 240 kmph,” the bulletin said.
Sanjay Datta, head-underwriting and claims at ICICI Lombard General Insurance explained that these weather-related conditions are covered under the ‘act of god perils’ clause in insurance. “While we have to wait to see which areas the cyclone hits, operating plants would face an impact. This is because in some cases the cyclone loses its intensity before it hits the land,” he added.
In insurance terminology, an act of god peril refers to a natural catastrophe that cannot be prevented. This includes natural disasters and catastrophes cyclone, flood, earthquake, landslides. Act of god perils’ insurance is typically taken to protect property and business from the above risks. However, some policies exclude these risks.
Life insurance policies may not be adequate to cover the risks, said a senior life insurance official. “We anticipate that there could be several families below the poverty line, who are not adequately insured. If the cyclone intensifies, it would pose a big risk to them,” the official added.
Meanwhile, insurers are hoping that the cyclone does not pose a big threat to property. K G Krishnamoorthy Rao, MD & CEO of Future Generali India Insurance said that while industrial risks in those areas are well insured, property is not been adequately insured.
Insurance companies have estimated a total loss of Rs 1,500 crore from claims in the Uttarakhand region. In June-July 2013, Uttarakhand was affected by floods and land-slides with severe loss to life and property.
Natural catastrophe pool, to cover the risks due to natural disasters, has been an idea, which has been mooted in India since the last few years. A catastrophe pool (or 'cat-pool' for short), similar to a terrorism pool, helps distribute the risk of such natural disasters evenly, thereby offering quicker relief to the victims. It also lowers the hit that individual insurers have to take on their books.
Early this year, non-life insurance companies had presented a concept paper on catastrophe insurance to the National Disaster Management Authority (NDMA). The concept paper highlighted the need for a pool mechanism to deal with losses from catastrophic events.  However, it is still stuck as a concept because there has been no consensus between the insurers and NDMA on who would fund the process and how the pool will function.





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