The drop in rupee currency has impacted travel insurance.
According to Rediff Business, the rupee, which has decreased 23 percent since May has increased losses for the coverage.
This amounts to a 20 to 25 percent increase in loss ratios for general insurers. As a result insurance companies are prepping to raise the premiums for customers requesting coverage for trips. Costs for the insurance are paid in rupees, while claims are paid in dollars Rediff reported.
Rakesh Jain, chief executive officer at Reliance General Insurance told Rediff changes will have to be made if the situation stays the way it is.
"The sharp depreciation of the rupee has impacted the current business scenario and has lowered demand for overseas travel," he said. "If the Indian rupee remains weak and the business scenario persists, insurers will have to increase the cost of travel insurance to deal with the situation."
Travel insurance is commonplace for customer travelling internationally and cover claims from unexpected incidents including medical costs, loss of baggage or passports. Those going overseas just to receive treatment are not allowed to claim medical costs per a travel policy Rediff reported. Premiums are higher for senior citizens because medical risks are greater with old age
Sanjay Dalta head of underwriting and claims at ICIC Lombard General Insurance told Rediff the rupee's decrease was not expected, and could not be calculated in when figuring out premiums.
"In the long-run, the premiums would have to be adjusted if dollar appreciation continues," he said.
M Ravichandran, president of insurance at Tata AIG General Insurance told Rediff the loss ratios have increased because the rupee has gone so low.
"We, as an industry, are looking to work out modalities to adjust travel insurance premium to be in line with the current exchange rate and would seek regulatory approval for the same," he said. "This would help in insulating the effect of exchange-rate fluctuation on loss ratios."
