Insurers Hit By Flood Claims

Insurance companies have been hit by a spate of flood claims after last Wednesday’s rains, said to be the highest that Colombo has experienced after four years, with some insurance companies having had received individual claims amounting to as high as Rs. 25 million each.

Janashakthi Insurance Managing Director Prakash Schaffter said that they had received around 40 flood claims mainly from the Bloemendhal Road, Colombo 13 area.
The value of those claims ranged from Rs. 50,000 to Rs. 25 million each. They were currently processing those claims with disbursements due this week.

“Once upon a time these floods were deemed to be abnormal. But now due to the clogging of the drainage systems, what was once thought to be abnormal has now been deemed as normal by the industry,” he said.

Ramal Jasinghe, C.E.O. Asian Alliance Insurance said that they had received a nominal four claims, of which the value of one ranged from between Rs. 8-25 million.

He said that the upper limit was what was being claimed by the insuree, while the lower limit was what they felt should be the actual value of the claim. They were however working with the client in regard to this claim.

He blamed clogged drains and soakage land reclaimed for development as being the primary causes for this state of affairs, compounded by poorly maintained roads.
Eagle Insurance Director General Insurance Ainsley Alles also blamed unauthorized extensions and constructions for flooding.

Meanwhile another Eagle Insurance source who did not want to be named said that they had received around 15 claims for a total of around Rs. 15 million from Colombo and the suburbs. While around five claims have been paid, the others are being assessed.
He however observed that surprisingly the claims they received were low.

The source attributed this to the fact that their clients themselves now know that Colombo is susceptible to flooding and has taken the necessary mitigatory steps as a result.

Miss Ruwanthi Gooneratne, General Manager (General), Union Assurance said that they had received 20 claims emanating from the floods of November 18. They were mainly confined to the Colombo 12 area, with one even made from Horton Place, Colombo 7.

Those claims comprised a mix of residences and affected warehouses. Their lost adjustors were working on those claims. She was unable to give a value in regard to the same, but said that some claims were over Rs. one million.

Sri Lanka Insurance Corporation (S.L.I.C.) has had 40 flood claims mainly from the Pettah and Jetawanarama road, with small businesses being the victims. The values of those claims are being processed, S.L.I.C. C.E.O. Dr. Nalaka Godahewa said.

He further said under normal circumstances S.L.I.C. pays claims totalling Rs. 18 million daily, most of which are general insurance claims.

H.N.B. Assurance General Insurance Head Gerry Gunasena said that their insurance portfolio was not heavily weighted towards fire insurance (flood protection cover is an adjunct of fire insurance).

“We have issued a few policies, but those were outside the flood areas, we avoid flood areas,” he said.

Areas affected included Colombo, Ratnapura, Rajagiriya, Moratuwa, Koralawella and Hambantota, Gunasena said.

Meanwhile Ceylinco Insurance has had some 90 flood claims amounting to between Rs. 50-60 million submitted for compensation due to the recent rains.

“About 45 of those claims emanated from Colombo and the suburbs,” Ajith R. Gunawardena, Joint Deputy Chairman Ceylinco Insurance PLC said.

While some of those claims have been paid on the spot, others are awaiting documentation for payment process, he said.

“For instance if a trader has claimed that his stock of dhal has been spoilt due to the rains, then he has to support that claim by submitting the relevant purchase order,” said Gunawardena.

Maradana, Ratmalana, Pettah and Jampettah areas in Colombo and in the suburbs had some of the highest claims, he said. Forty per cent of Ceylinco Insurance General’s income is derived from the Western Province.

Claims from Colombo came after last Wednesday’s rains, but from other areas, like Avissawella, Kandy and Galle, earlier, he said.

Flood Cover is an adjunct of Fire Insurance Cover, where the latter is considered to have the second largest value after Motor Insurance Cover in the General Insurance category. Another cover under this category is Marine Insurance Cover.

However Gunawardena said that while they settle 565 on the spot motor insurance claims daily, the number in regard to non motor insurance claims in the General Insurance category were between a mere 160-170 monthly.

He valued the General Insurance market as per last year’s statistics at Rs. 35 billion, of which Ceylinco Insurance, the market leader in this category, has a 34.7% stake. Gunawardena said that the Motor to Other General Insurance ratio, for them, as well as for the industry was 55:45. Motor insurance is mandatory in the country.

The company in the first half of the year recorded a total premium income of Rs. 8.2 billion of which the General Insurance Division contributed Rs. 4.5 billion while the balance came from the Life Division. The company earned a profit before tax of Rs. 279 million for the same period.

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