Bracing for record claims after last week's catastrophic Mumbai deluge, some leading Indian insurance companies are planning to quietly delete 'flood' from their standard household insurance policies.
The Times of India reported that overall general insurance claims of more than 15 billion rupees ($2.6 billion), from almost 10,000 policy-holders in Mumbai and elsewhere in Maharashtra state, have forced public and private sector insurers to consider radical changes to keep their heads above water.
At present, a household insurance policy provides cover in the event of fire and flood, as well as burglary.
Industry sources said firms were contemplating dropping floods from standard policies so that they could charge a separate hefty premium for flood cover.
P. Balasubramanian, director of the Insurance Regulatory and Development Authority, the industry watchdog, said he had been asked to convene a meeting to discuss the unprecedented financial burden caused by the deluge and find solutions.
After earthquakes in Maharashtra's Latur region in 1993 and in Gujarat in 2001, some insurance firms dropped earthquakes from their policies.
J.K. Gupta, general manager of New India Assurance, the country's largest general insurance company, said there were so many individuals, shopkeepers, small industry owners and even top corporate firms filing claims in Mumbai that his company was flying surveyors in from other cities to help settle them.