Relief for businesses that were at risk of losing property cover1 min read . Updated: 29 Apr 2020, 09:59 PM IST
- One-time relaxation is given to policyholders whose property is unoccupied on or after 25 March till 3 May
- Insurers want businesses to ensure adequate safety and security in their premises
MUMBAI : Industry body General Insurance Council (GIC) has provided much-needed relief to millions of businesses that were at risk of being stripped of property insurance because of the ongoing lockdown by relaxing the terms of a clause in the insurance contracts that the cover will be terminated if a property is unoccupied for more than 30 days.
“It has been decided that a one-time relaxation is given to all policyholders whose property is unoccupied on or after 25 March till 3 May. Properties of such policyholders shall be deemed to be covered subject to the policy being in force," GIC said in a notification on Wednesday.
This is a marked change from the stand insurance companies had adopted earlier. The insurers were writing to businesses asking them to comply with their requirements, failing which the cover could be discontinued or claims would not be paid.
The Insurance Brokers Association of India (Ibai) then wrote to the insurance regulator on 27 April, highlighting its concerns.
“As the current lockdown period cumulatively has been extended beyond 30 days, insurers should take cognizance of the current state of affairs and treat this as an extraordinary and one-off situation. We request the authority to advise the insurers of the same in the interest of the policyholders," Ibai told the Insurance Regulatory and Development Authority of India. Mint has seen a copy of the letter.
Insurers had started shooting off letters to businesses highlighting the clause on the cessation of the cover when the lockdown extended beyond 30 days, according to a broker who did not want to be named.
They had said that the cover would be continued only if risk management measures required under the policy are adhered to.
Essentially, insurers wanted businesses to ensure adequate security on their premises, functional cameras and sprinklers, and fire extinguishers where the expiry date has not been crossed.
However, companies were finding it hard to replace expired fire extinguishers, repair faulty cameras and comply fully with the conditions that insurance companies had demanded, because of the strict lockdown measures that have been imposed.
“Businesses pointed out that while they are trying their best to comply with all these requirements, it was not possible to be fully compliant during the lockdown," said Abhishek Bondia, managing director and principal officer, Securenow.in, an insurance broking firm.