(Bloomberg) -- Insurers from Lombard General Insurance Co. toAmerican International Group Inc. are bracing for a surge in Indianclaims to a 10-year high after unprecedented floods last weekravaged Chennai, the city home to factories of Ford Motor Co. andBMW AG.

Disruption in road, rail and communication networks hinderedefforts by the automakers to resume production after they shut downfactories on Dec. 2. Officials put the death toll at 277 from thedeluge since the start of October as a threefold increase inseasonal rainfall brought the metropolis of 9 million to its knees.The Associated Chambers of Commerce and Industry ofIndia estimated losses to businesses at more than 150 billionrupees ($2.3 billion).

The insurance industry expects 10 billion rupees in claimsimmediately, with most coming from residents who lost property suchas motor vehicles, while businesses may claim a bigger share, saidSanjay Datta, head of underwriting at ICICI Lombard GeneralInsurance Co. The disaster in Chennai brought back memories of a2005 cloudburst in Mumbai that caused similar flooding, prompting30 billion rupees of claims, he said.

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“While a clearer picture would emerge in next few days it couldin all probability be much higher" than the current industryestimate, said M. Ravichandran, president of Tata AIG GeneralInsurance Co., who says the filings could be the highest in Indiasince at least 2005. “Claims on damaged motor vehicles andbusiness establishments will form majority of the insuranceclaims.”

Small and medium enterprises, automobile manufactures, utilityservice providers and information technology companies are amongsectors most affected, he said. Insurers received claims for about5 billion rupees 15 days ago, he said, which was before thefloods.

Monsoon rains

The fourth-biggest Indian city contributes about 3% of thenation’s gross domestic product, with the metropolitan area’smanufacturing industry accounting for 1.5 trillion rupees,according to research by SMERA Ratings Ltd., a partnership betweenSmall Industries Development Bank of India and Dun & BradstreetCorp. Small industries could potentially lose 8.4 billion rupees aweek because of the floods, it said.

The city had a record 1,218.6 millimeters of precipitation inNovember, three times more than normal, and 506 millimeters thismonth through Dec. 5, according to forecaster Skymet. The northeastmonsoon typically sets in between October and December over India’seast coast, where Chennai is located.

“An impact from such a natural calamity will have seriousramifications on not only the local but national level,” SMERA saidin an e-mail response to a query. “These estimates are conservativeand the financial impact can double with every week of businessforegone.”

Too early

Chennai and its surrounding areas are home to manymanufacturers, including Hyundai Motor Co., Ashok Leyland Ltd.,Renault SA and Daimler AG. Eicher Motors Ltd., the maker of RoyalEnfield motorcycles, said the showers severely affected itsfacilities, offices and staff, disrupting logistics and supplychain. In November, it lost production of about 4,000 bikes, itsaid.

Ford and Renault said they resumed production at their units inthe outskirts of Chennai on Monday, though the attendance was thin.Tata Consultancy Services Ltd., India’s biggest software maker,said it doesn’t expect all its employees to report to work afterreopening. Cognizant Technology Solutions Corp. said its officesare open and business was “as usual.”

Insurers and re-insurers will share the burden of the claimspayouts, ICICI Lombard’s Datta said. Home insurance is veryrare in India and the claims on damages to houses and apartmentswill be low, said TATA AIG’s Ravichandran.

It is far too early to give estimates on the losses and claimsfrom the event, Munich Re and Swiss Reinsurance Co. said inseparate e-mails.

“As all insurers have re-insurance in case of claims above acertain limit, the net hit on them may amount to few billion rupeesalthough the overall pay-out could be in the range of tens ofbillions," Ravichandran said.

--With assistance from Siddharth Philip and GaneshNagarajan.

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