Insurance premium for hospitals may rise

Fire insurance premiums for healthcare facilities across India could go up significantly following last Friday’s fire at Kolkata’s Amri Hospital, which killed at least 90 people.

 

Hospitals found deficient in coping with a potential fire hazard will be asked to improve infrastructure within a definite timeframe, and if they fail to do so, their insurance cover could be terminated, said N.S.R. Chandraprasad, chairman and managing director of state-owned National Insurance Co. Ltd (NIC).

 

It appears insurers assess risks through inspection only when the cover offered is big, said J. Hari Narayan, chairman, Insurance Regulatory and Development Authority. Otherwise, they rely entirely on certificates and reports of local civic bodies, he added. For instance, Amri Hospital had obtained a Rs. 55 crore cover against fire from NIC. It is only after the accident occurred that the insurer has been examining fire safety arrangements at the hospital, according to Chandraprasad.

 

As a rule, NIC would assess safety arrangements at a hospital through inspection by its own officers or hired surveyors only for a cover of Rs. 100 crore or more, Chandraprasad said, adding that the threshold for close scrutiny is being reduced to Rs. 50 crore.

 

More than one-tenth of NIC’s premium income comes from fire policies. In fiscal 2011, for instance, it received around Rs. 700 crore of premium for fire policies out of its total premium income of Rs. 6,245 crore.

 

“We will, from now on, definitely give more importance to self-inspection as a part of our underwriting process,” said G. Srinivasan, chairman and managing director of United India Insurance Co. Ltd, another public sector insurer. Read More