Super cyclone Amphan that tore into coastal parts of eastern India and Southern Bangladesh on 20 May has wreaked havoc along a large part of the coastline, including the metropolitan city of Kolkata in India.
The monster cyclone with wind speeds of over 180km/h was the most powerful storm to hit the region in over two decades and has killed close to 100 people at last count and and estimated damage to land and property worth $13bn in India and $129m in Bangladesh. According to media reports, the cyclone has destroyed or damaged over 1.5m homes in the region. Over 300,000 people in India and over 2.4m in Bangladesh were evacuated to storm shelters.
Insurers to take a huge hit
Initial estimates have mentioned insured losses to be in the region of INR350cr ($47m) but this is expected to rise substantially once claims mount as communication lines are cleared and insurers’ offices begin to function again.
NAT Cat events are among the major risks for insurers in the region, though insured losses are just a fraction of the actual losses.
For example, in May 2019, Cyclone Fani that hit the coast of Orissa in May 2019 caused widespread damage to property, vehicles and crops resulting in insurance claims of over INR2,000cr ($300m). Total economic losses were close to INR6,500cr from Fani, that reflected a huge disparity between actual losses and insured losses.
Super cyclone Amphan is expected to see huge claims in the property and motor segment, as entire villages and warehouses have been flattened in the strong winds. Moreover, hundreds of parked vehicles were reported to have been damaged in Kolkata, as trees and other free standing heavy objects fell on them in the strong winds. The Kolkata international airport also reported severe flooding that has damaged planes and caused structural damage to the terminal building.
Life insurance claims are expected to be relatively lower, in the wake of the country’s improved disaster management initiatives.
Mr Tajinder Mukherjee, chairman and managing director of state-owned National Insurance, told Business Standard, “Motor, property and crop are typically the most affected portfolios in such catastrophes.” He also said, “We also have some exposure in crop insurance although a major part of the harvesting season is over.”