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Weak rupee may affect general insurance industry

The weakening rupee is expected to increase the cost of general insurers by an average 10% in settling travel claims

July 16, 2013 4:22 IST | India Infoline News Service
The regulators and policymakers in India have taken a number of measures to curb rupee volatility. The rupee has depreciated by over 12% against the dollar since the beginning of the current financial year 2013-17.

The weakening rupee has been giving a tough time to economy, stock market, companies, etc. According to a survey conducted by Assocham, the country's middle class is forced to cut back on eating out, buying branded products or new cars, studying abroad etc. as their monthly expenditure has risen by 20% due to the fall in rupee.

The middle income group has been impacted most by inflation particularly in context of the rupee slumping to new lows and its cascading effect leading to price rise of petroleum products, edible oil, studying abroad, foreign trips, as their monthly expenditure has risen by 15%-20%, the survey said.

The depreciating rupee is also affecting general insurance industry players. The weakening rupee is expected to increase the cost of general insurers by an average 10% in settling travel claims, according to general insurers.

Hospitalisation claims, which form the major chunk of overseas travel insurance, will definitely be higher due to the prevailing volatility in the rupee.

The insurers also pointed out that the weakening rupee
may also impact marine insurance claims though that depends on the nature of shipments and clients' geography and that the impact will be higher if the rupee continues to fall for a longer period.




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