The climate change will be the next biggest issue to ponder for the insurers worldwide. The main issue with climate change is predictability. The way the climate change is occurring it is becoming increasingly difficult for insurers to predict future events and probable losses. The catastrophic losses can create havoc on the balance sheet of insurers and harden the insurance rates. This will ultimately affect the common insured’s. So it is the high time common people, industries, countries must think about the ways to protect the environment. We should not leave the matter to government to take care of outcomes. Every Individual citizen is responsible to protect the environment.
Insurance Companies are facing the acute problem of rate cutting and discounting. To solve this problem they must first decide among themselves that they will not allow discounting beyond a level. IRDAI can also think of bringing some kind of tariffing where the rates cannot fall below a certain limit. This will help to stem the losses in certain portfolios and make them self sufficient. Though we are lucky that there has not been any major catastrophic loss in major cities in India. If a catastrophe strikes then the rates that are being charged currently will be grossly inadequate to meet the losses.
IRDAI has now allowed insurers to issue standalone own damage policies for two-wheelers and cars – both new and old, on an annual basis. “From September 1, 2019, the issuance of bundled policies for cars and two-wheelers will not be compulsory. Insurers will have the option to offer package policies, in addition to stand-alone own damage and third party policies,” the IRDAI has said in a new circular.
The government is also exploring various consolidation options including merger of state-owned general insurance companies with New India Assurance with a view to create synergy and unlock value.
