Following a barrage of claims brought on by October's glacial lake outburst and record flooding in Sikkim and sub-Himalayan West Bengal, Indian insurers are hiking premiums by up to 25% for industrial sites, railroads, roads, tunnels, bridges, and other public infrastructure assets.
After unseasonal rains early in October caused the banks of the glacial South Lhonak Lake to breach, a wall of water battered public infrastructure assets and drowned homes across a large swathe of urban Sikkim and the hilly reaches of West Bengal. The state-owned hydroelectric unit Sikkim Urja filed an insurance claim of 500 crore.
"The industry has decided to raise rates by as much as 25%, mostly to get reinsurance support, in the wake of the large claim from Sikkim Urja," an industry source told ET. "If insurers do not raise rates, it will be difficult to get reinsurance support."
Speaking under anonymity, insurance executives stated that the new charges are required to manage rising risks, particularly since reinsurers won't cover such public assets without further funding.
