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Insurance Article

Insurers Seek to Charge 2-3 Times Premium on Cash Carrying Companies

November 21 2016
Cash Carrying Companies

After the government scrapped ` 500 and ` 1000 notes from the market, cash carrying companies are seeking higher insurance cover. A few companies are even asking for insurance limits as high as ` 500 crore per location. Consequently, insurance companies are charging 2-3 times premium for ferrying the money.

Insurers provide coverage against theft and other untoward incidents to cash carrying companies that manage the functioning of ATMs. With demonetisation, the amount of cash transported to ATMs has increased significantly. As a result, companies which took a cover of ` 1-2 crore are now demanding a cover up to ` 20 crore.

As per Sanjay Datta, head of underwriting at ICICI Lombard, “Cash carrying companies are seeing a significant increase in risk, so the sum assured has gone up.” Most of them are operating at less than 40% of their output and simultaneously dealing with the reverse flow of demonetised currency.

Higher denomination of ` 2000 flowing into the economy has doubled the exposure. An ATM that contained Rs. 45 lakh previously now has ` 90 lakh with the same number of currency notes. With more frequent replenishment of ATMs, the demand for insurance will certainly increase until normalcy is restored.

Also Read:

Defunct Currency Notes Can't Be Used for Insurance Premium Payment
IRDAI Plans Data Security Standards for Insurers

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