Wednesday, July 28, 2010

Insurance costs may rise with flood waters

People living in or owning properties in flood-prone areas could pay more for general insurance in the future as underwriters review their risk exposure. There are no planned increases but the recent cases of flooding are causing concern in the industry. Insurance premiums are unlikely to rise if floods happen every 5 to 10 years, but it will be a different story if it is happening every year.

Claims for damages to property and motor vehicles could exceed $10 million as a result of the three floods recently. Income has received more than 100 claims from the floods for damage to properties and vehicles to date.

Loading or surcharge on premiums are likely to be impose by insurers for properties in areas like Bukit Timah, Dunearn Road and certain stretches of Orchard Road. Properties in flood-susceptible areas could attract a surcharge of about 10% of the premiums payable. Cost of motor insurance may also rise for people living and working in flood-prone areas.

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