Have you ever thought of your home or property insurance if it is damaged by tree-falling on your house or flood or severe earthquake or any other kind of natural disastersIJ If yes, you may probably need to get separate policies to cover that kind of damage as housing finance regulator National Housing Bank (NHB) is soon coming with new revised property insurance scheme to protect your house or property.
The NHB is currently studying the existing system of property insurance whether it is viable for the customers in the country or not. Very few people know that property insurance covers only the construction cost of the property they own, but they are not aware of the fact that they can claim the damage of their own home or property.
Confirming the development, NHB Managing Director and Chief Executive Sriram Kalyanaraman said, “We are currently reviewing if the existing system of property insurance is viable for the customers or not. We have also roped in Hyderabad-based Administrative Staff College of India (ASCI) to conduct a study on this topic and they are likely to submit their final report in five months’ time.”
Even though the NHB is not a regulatory body for insurance like Insurance Regulatory and Development Authority of India (IRDAI), Kalyanaraman is still hopeful that the NHB can always take up this issue with prior consultation with the insurance regulator so as to make home or property insurance more useful for the customers. “The NHB is interacting with stakeholders like housing finance companies (HFCs) and insurers as well for the study. The idea is to know from customer’s perspective if the insurance product is useful or not,” he said.
When asked about the details of the scheme, the official said, “The scheme is under study and it will be out after the review reports come to us. Our effort is to make more popular for property owners in the country. We hope they will get more benefits than the existing ones which have been offered by insurance companies.”
At present, home or property insurance is a completely banking product in India. Insurance providers too are not lacking in their sob stories. However, insurance brokers are of view that many home insurance schemes come with inflationary clauses keeping in mind the increasing prices of resources, land and related labour cost. “Due to rising number of natural calamities and personal accidents, the claims have increased manifold. And since the firms tend to bear the lion’s share of the claim expenditures, it makes sense to them to levy bigger premium amount,” said an insurance broker.
The general insurance industry has sought tax benefits for insurance for property against the natural disasters. The industry, through the General Insurance Council, has expressed concerns about low penetration of property insurance and sought tax relief so that people are motivated to buy these products.
Meanwhile, the NHB is working on a complete revamp of its residential housing index or ‘Residex’ and new indices such as rental index and building and construction material index. “We we are likely to come up with revamped Residex over next three years’ horizon. The new Residex will be having both evaluated value and registered value of a house as well. NHB is also working on two more indices which include rental index and building and construction material index,” he said, adding that the company has roped in the realty research firm liases Foras for providing the valuable inputs.
As of now, Residex is available for 26 cities. The company is expected to add two more cities very shortly and take it to 45 cities over next couple of years. “Besides, we are also working on automation of refinance which may take less than a year now to complete,” he said, adding that the NHB has roped in various State Governments for rationalisation of stamp duty too.