Indian insurance companies cancel coverage for war damage
Indian insurance companies, including HDFC Ergo, have made a significant decision to cancel coverage for damage resulting from strikes, riots, civil commotions, lockouts, vandalism, and sabotage in the Israel/Gaza/Lebanon region due to the ongoing war. This move is aimed at mitigating potential risks associated with war-related activities.
While this will have an impact for marine cargo insurance policies, which is important for businesses involved in shipping and transporting goods across the Israel/Gaza/Lebanon region, insurance companies generally take such steps to avoid increase in reinsurance rates.
«Insurance companies have cited concerns about rising reinsurance costs as a driving force behind this directive,» said an executive at an insurance intermediary.
«They want to keep claims in check to avoid potential increases in reinsurance premiums. It's expected that reinsurance companies will follow suit with their own directives.»
Typically, insurance companies sign reinsurance treaties at the start of the financial year, and while this year's contracts are already in place, they expect higher costs when renegotiating with reinsurance providers in April next year.
The ongoing conflict in Israel has raised shipping and trade route risks, particularly in the eastern Mediterranean.
