Fire cover premiums to surge as rising claims pour cold water on discounts
Fire insurance premiums are set to rise sharply from this year, as large general insurers, including ICICI Lombard and Oriental Insurance, withdraw or reduce deep discounts on the covers they provide. The decision comes in response to surging claims and a push for risk-based pricing from reinsurance companies.
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The general insurance industry collected a total gross premium of ₹25,666 crore under fire insurance policies in FY24, a 7.27% growth from ₹23,936 crore in FY23. However, the incurred claims ratio in the segment has soared, deteriorating to 78% in FY24 from 58% in FY23, putting a strain on the profitability of insurance companies in this segment, which constitutes around 9% of the industry's total premium income of ₹2.9 lakh crore in FY24.
For years, insurers have offered steep discounts of up to 95% on base fire insurance rates for policies such as Industrial All-Risk (IAR) and Mega Risk covers.
Oriental Insurance, for example, has withdrawn its 95% discount on FLEXA (fire, lightning, explosion, and aircraft damage) policies, a source said. Additionally, the company has reduced discounts on other coverages, a 75% discount on Storm, Tempest, Flood, and Inundation (STFI) coverage, now capped at lower levels and
