The insurance cost of high-risk properties is going to increase. This is because insurance companies are apprehensive of increasing rates for such properties in the reinsurance markets. Most of the major insurance covers are revised with the beginning of the financial year which is as per the policies starting from 1st April.
According to a report in The Times of India, for the first time, several non-life insurance companies have decided to link the price of fire insurance policies with individual claims experience. As per the industry sources, these changes are coming after the regulator's directive that there is no compulsion to accept the rates published by the Insurance Information Bureau as the minimum rate.
Linking the insurance rate to the track record of the policyholder helps companies offer discounts to more and more customers. This is because property insurance claims are fewer in comparison to motor or health insurance. However, the rate of policy being decided on the basis of claim experience is nothing short of bad news for people who have made huge claims in the last three years. Insurance companies are going to double the rates for those who have claimed more than three times the premium paid.