GIC Re has mandated the general insurers in India to hike the rates of fire insurance, being the lowest of the lot. Read on to know more about this revolution.
The reinsurance Company General Insurance Corporation of India (GIC Re) has declined to accept business proposals from the general insurance companies in India. The quotation of low insurance rates for last many years has led to this refusal.
As per the Indian Insurance norms, the reinsurance offer first needs to be made to the domestic insurers i.e. the GIC Re, a Government run organization only if it is of the view that the general insurance companies have succeeded to price their risks responsibly.
As per the new rules by the Indian Insurance, it is mandatory for the domestic insurers to ensure higher provisions for their risks. This, in turn, would also lead to a loss for the domestic insurers with India being the only country that has the lowest fire insurance rates.
Generally, health, motor and fire insurance are the key businesses for the general insurance companies. However, fire insurance has a lowest insurance rate of 7% of the total gross direct premium of Rs. 1.50 trillion, reported in 2017-2018.
GIC Re has therefore informed around 34 insurance companies to raise the pricing of the fire risks in each insurance category.