If you haven’t insured your residential or commercial properties, now is the time to do so. As told by the real estate experts in Arun Dev Builders, the property insurance prices will rise significantly from July 2017. The Insurance Regulatory and Development Authority of India (IRDAI) has ordered insurance companies to revise insurance rates. This will boost the fire insurance costs as well. Apart from the overhauled rates, 109 factors have been added to the risk occupancies. It’ll make insurance viable on a number of cases, thus, also increasing opportunities for insurers.
Fire and property insurance rates were constant till 2007. Quality of service and insurance plans were the only two parameters that could distinguish one insurance service from another. Everything changed when the tariffs were removed. This led to a chaotic competition between all the insurers. Insurance companies started to lure clients with astoundingly low incentive rates. This resulted in the insurance sector experiencing a mind-boggling loss of about 75%.
Year 2015 saw the first array of rules raised to tackle this muddle. It laid down the new rules of tarriffing for the insurers. The Insurance Information Bureau (IIB) then setup insurance charge rates for different occupancies, as directed by the insurance regulator. Insurance rates for offices, residential flats were reduced since they’d experience lower risk as compared to industrial units.
However, insurers cannot have a base rate lower than IIB’s benchmark. Additionally, IRDAI does not recognize natural disasters like earthquakes, landslides, hurricanes, and floods in IIB’s data as an event to apply burning costs. According to Arun Dev Builders, the insurance companies are advised to update their prices and services to include add-on covers other than explosion, fire, and other damaging events. Spreading the home insurance culture is also important in the Indian real estate sector and moves like this will have a tremendous impact.