Fire, engineering insurance premiums may rise by up to 60% in 2025: Key factors

Fire and engineering insurance premiums are expected to surge by 15-60% in 2025, according to media reports. The rise is a direct response to higher claims linked to catastrophic events and escalating loss ratios.

This has forced reinsurers to adjust their pricing and compensate for the growing financial strain.

Sajja Praveen Chowdary, Director at Policybazaar for Business, explained the situation, “The projected rise in fire and engineering insurance premiums—ranging from 15% to as high as 60% in certain cases—signals a significant shift in the insurance landscape for Indian businesses. This adjustment is a direct response to mounting claims from catastrophic events and the pricing corrections driven by reinsurers and industry regulators. Hydro energy companies, which have seen NAT CAT losses every year in the past 2-3 years, are more prone to higher premiums and restrictions in coverage offered by various insurers and reinsurers.”

For businesses, this is a pivotal moment to act.

According to Chowdary, policies renewed early in 2025 may experience more moderate premium hikes compared to those renewed later in the year.

“With the upcoming insurance treaty renewals on April 1, 2025, the high loss-to-premium ratios will push reinsurance rates even higher,” he told CNBC-TV18.com.

What is fire and engineering insurance?

Fire and engineering insurance covers businesses for risks such as property damage, loss, or liability resulting from fire, accidents, or engineering-related issues.

It is crucial for industries like construction, manufacturing, and energy, as it safeguards machinery, infrastructure, and physical assets.