General Insurance companies are going to keep travel insurance rates flat this year due to stabilised rupee. Travel insurance premiums are unlikely to rise by general insurance companies due to the increasingly stabilising rupee. General insurers pay out the claims for outbound travel insurance in foreign currency while premium in rupees is collected by the insurance companies.
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The MD and CEO of Bajaj Allianz General Insurance, Tapan Singhel said that the general insurance companies would be able to maintain current premium costs as the rupee has stabilised at 60-61 to a dollar during the last three months.
According to the CEO of Tata AIG Insurance, KK Mishra, insurance companies have been seeing a greater loss ratio in the travel insurance sector as most of them had priced their insurance plans when the rupee was around 55 to a dollar. He added that insurance companies will be forced to increase rates or relate it to the exchange rate fluctuation in the currency if the rupee weakens beyond 60-61.
Only 0.1 % i.e. about Rs 540 crore of the total premium collected by the industry comes from Travel Insurance. So, it is currently a very small portfolio for general insurers.
Insurance companies feel that most of the travelers take travel insurance only when they are travelling to Schengen area comprising 26 European nations where having a cover is compulsory and when they are travelling to Canada and US where medical costs are very high. Tourists don't feel the need of travel insurance while travelling to South-East Asian countries.
For instance, a 30-year old traveller would pay 30-40% more for a trip to Canada and US than he would pay for a 10-day excursion to Europe for emergency medical expenses, accidental death, loss of baggage, etc.