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As we all know IRDA has introduced three new products in the market with effect from 1st April 2021. If you look at the wordings of these policies, you will find that scope of coverage is much wider than the standard fire policy. Although it is a welcome move by a regulator which favors policy holders to a great extent because it allows many add-on covers as built-in cover in the policy. Pricing of these products was left to the insurance companies who were expected to workout anticipated losses because of the widening of the scope of cover. Unfortunately, 100% discount on flexa rates is being freely allowed in the market on these products and some of the insurance companies are even willing to discount minimum Nat-cat rates in order to grab business. This is a cause of concern because the regulator was expecting at least some reasonable loading on existing rates but it appears that we all have knowingly joined a mad race once again. Let us see when a better sense would prevail amongst...

It is observed in the current market that few insurance companies are offering very competitive prices and widest possible covers at the time of underwriting to attract major clients and they succeed in converting business. In few cases they continue with expiring policy deductibles even though the loss history of the account is very bad and the competition is quoting with higher deductibles. Invariably, clients and brokers look at pricing and scope of cover ignoring the track record of claim settlement of a particular company. Unfortunately at the time of claim, these companies try their best to find out some loophole in policy and decline claims even though the independent loss assessor is satisfied and is recommending settlement of the claim. I have seen many cases where the risk was wrongly categorized by the company and the premium was paid by the client as demanded by them but the claim was repudiated on the grounds that actual operations are different than what is stated on the ...

 The latest  trend in insurance which I am observing is the demand for cosmetic and irrelevant add-on covers. I call them cosmetic because the basic purpose of demanding such covers is just to increase numbers at no additional cost in order to satisfy clients by many intermediaries. For example, Molten metal spillage cover is demanded in chemical plants which has no relevance at all. At the same time, same meaning add ons are demanded in different names. Few examples are 1. Omission to insure and Inadvertent omission. 2. Goods held in trust and Property in care and custody of insured. 3. Claims preparation cost is being asked for in material damage as well as in BI section of the policy separately with independent limits. 4. Loss minimization expenses, Fire fighting expenses are being demanded separately with separate limits although the basic policy cannot deny any amount incurred by the insured with the sole intention of minimizing the loss without any limit so long as you s...

It is understood that many underwriters still do not have the clarity about the provision of continuity cover available under project insurance policies.  In view of the same I would  like to clarify that property underwriter should not remain under the impression that if continuity cover is opted for say 6 months, then the completed portion of the project will remain covered under project insurance policies indefinitely if the integral testing is completed within selected period of 6 months. Please understand Continuity cover starts after completion of testing and commissioning of a particular unit or part of project which is required to wait for completion of remaining units of the project to participate in integral testing of whole plant. If the period allowed for continuity cover is 6 months and integral testing commences after expiry of this period then the completed portion shall remain uncovered till commencement of integral testing.

Spoilage material damage cover is allowed under fire policy as add-on cover operates. It covers spoilage of material under process resulting from the retardation or interruption or cessation of any process or operation caused by any of the perils covered under this Policy e.g. Stoppage of production machinery due to failure of power supply caused by operation of insured peril. Damage due to change in temperature is different and is excluded under  IAR policy unless covered as an Add on cover e.g. Deterioration of stocks kept in cold storage due to rise in temperature arising out of stoppage of refrigeration plant & machinery.

IAR policy excludes loss or damage to insured property arising out of failure of electricity supply to the plant. But as per exclusion wordings, any subsequent loss to insured property caused by an ensuing peril not excluded in the policy, shall be payable. For example if material undergoing process gets damaged / spoiled due to failure of electricity, it is excluded but if failure of power supply causes accidental fire and damages insured property, then this shall be payable as ensuing damage. This should not be confused with CBI extension available under BI section of policy in respect of failure of electricity supply. We are talking about material damage section of policy. Hope it clarifies all doubts relating to this exclusion