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Cyclone : Insurance claims low

Star Economic Report
A substantial number of Insurance claims by parties in the cyclone-hit areas in Chittagong will be inoperative, insurance Circles said in Dhaka
Comprehensive risk cover age particularly against cyclone. tidal surge or similar natural calamities is absent in many cases or notices of claims received by the insurance companies
Insurance sources said that bulk of 'real' claims related to ' marine insurance. There would be some genuine claims in other sectors too. But the amount of real insurance claims is unlikely to exceed. ‘ Taka 450 crore, the sources said.
They however cautioned
that the estimates were still provisional and would Involve further scrutiny.
The net loss for the country's Insurance companies will be much lower than that feared earlier. Insurance of insurance known as reinsurance will provide strong cushions for absorbing the shock.
Most real' claims are reinsured by the Sad ha ran Bima Corporation (SBC) and major Insurance companies in the private sector. So there will be recovery of losses from reinsurers from abroad, the sources pointed out.
In some cases particularly tn the smaller units in the Insurance sector, the sltuaUon may be somewhat different".
the sources said But. they added, claims Involving policies issued by such unite will not Involve any substantial amount of money.
However, reinsurance of reinsurance known as "retrocession" in insurance circles may entail tn the final count some losses for the domestic insurance Industry, mainly the Sadharan Bima Corporation In the public sector.
Retrocession is a kind of global network for risk sharing of the insurance Industry on an international scale, the insurance circles explained.
Meanwhile, a large number of claims, real or otherwise. coming from the cyclone-hit areas have posed a challenging task for the insurance companies in sorting out the cases and follow-up examination, verification and assessment of each of them.
Some circles have sug gested that the office of lire Controller of Insurance could prove itself more effective In facilitating early settlement of claims. Some fraudulent practices Including forgery of documents and backdated covers cannot he ruled out and such practices may procrastinate claim settlements even for genuine cases, knowledgeable circles feared.
The Insurance circles said, most affected units or parties particularly belonging to industrial sector along the eastern seaboard, were covered under fire or other insurance policies. There were only a few cases with policies covering comprehensive risks.
Higher premiums are Involved for comprelicnsive risk coverage. Many parties or units, affected by the cyclone, did not opt for such comprehensive insurance policies covering 'extraneous risks"
Whatever the final assessment about real claims, there will be. of course, some Jolts to the industry as a whole, the sources observed.
This will largely depend on the proportion of risks retained by each Individual company.
The century's worst cyclone and tidal surge ol April 29. the knowledgeable circles noted, may open up opportunities for new business by the insurance
companies
There will be a greater insurance awareness for covering diverse risks against the back drop of the recent experiences. the same circles observed.
With this awareness, premium earnings or incomes will rise for the companies as it happened after the devastating ikvjds of 1988.
Available statistics showed tlic gross premium earnings of the SBC and private sector general Insurance companies at Tana 190.72 crore in 1990 against Taka 178.56 crore in 1989 and Taka 154 98 crore in 1988
The growth in premium eamtngs in general insurance has been an encouraging one since the mid-eighties. Such earnings totalled only Taka 99 05 crore in 1985.
This growth has coincided with the opening of the insurance business to the private sector. And also, depreilation of Taka partly -Inflated the value of marine trade operations. leading to higher premium earnings tn local currency
In the overall premium earnings, the share of the SBC has recorded a decline th recent years while that of private Insurance companies has risen.
In 1989. a total of 16 general insurance companies tn the private sector had their gross premium earnings at Taka 99 15 crore against the SBC's Taka 79.41.
The figures were Taka 110.79 crore for the same insurance companies and Taka 79.93 crore for the SBC in 1990.