Terror Cover « Archives of Policy Mantra Blog
Tag Archives: Terror Cover

Terror Covers to Cost 15% Less

Posted on March 13, 2012 by
1 Comment

terrorism insuranceAs there has been no major terror incident since 2008 Mumbai’s terrorist attack General Insurance Corporation (GIC) has reduced the price of terror insurance cover by 15%. And it has also raised the cap on single claim from Rs 750 crore to Rs 1,000 crore for businesses.

 

This move will also take India close to international rates where terror insurance rates are 20-25% lower than India.

 

For manufacturing plants premium of the policy will fall to 25 paise for every Rs 1,000 insured from 30 paise earlier. Hotels will have to pay 15 paise for every Rs 1,000 insured from 20 paise earlier. However, individuals will continue to pay 10 paise. These rates will come in force from first April 2012.

 

Claims against terror attacks in India are settled through a pool of funds operated by GIC. All general insurance who sale such insurance make their contribution to the pool. After paying the claim of Rs 400 crore after November 2008 terror attack fund now has the corpus of Rs 1,700 crore hence, it gave opportunity to reduce the rates.

 

This drop in rates may give a boost to the incomes of Indian general insurers as now they can get that business that use to go overseas due to lower price.

 

Since 2002 there have been around 40 incidences of terrorist attacks but insurable loss has been falling as most of the companies have hired specialist security services.

Categories: News | Tags: , ,

Air India’s premium for annual insurance policy increased by 15%

Posted on August 23, 2011 by
No Comments

Despite of no-claim in FY’11 and same number of fleets this year Air India have to pay 15% more premium for its annual insurance policy which is due for renewal on first October 2011 as companies have quoted higher premium due to operational inefficiency of the company and some stringent regulation in the tender. Air India will pay premium of Rs 160 crore this is the highest premium out go; it has paid Rs 136 crore as premium in FY’11 for insuring its fleets which valued at $ 9.1 billion. ICICI Lombard was the lead insurer for the insurance policy of Air India of FY’11 while four public sector general insurers had the share of 40%.

Premium for Air India also rose by 15% in FY’11 on account of increase of fleet size and another reason was to increase was the Mangalore air crash which killed 158 passengers and a crew member.

Air India’s policy was once considered a prestigious policy this is evident as last time all major private insurers and public sector general insurers participated in the bid while this time only two bids were made one by ICICI Lombard and one by the consortium of four public sector insurers as now it is not on the focus of the insurers due to the some stringent conditions in the tender such as upfront payment in the case of claim and low margins; and another condition which kept most of insurers out of the bids is that companies have to guarantee full claim settlement even though re-insurers fails to pay its share.

There is another new provision in the tender according to which in the event of major loss insurers will have to provide interim relief of at least 25% of the hull claim within the 7 days of the incident whether or not insurer receives the share of the re-insurer.

Policy will cover three types of risks

  • Aviation hull- Aviation hull or basic cover includes aircraft, third party liabilities, engines, baggage and cargo.
  • Terror and war cover – covers emergency risk such as terrorist attack.
  • Deductibles – Deductible amount is the amount which insured have to pay before the beginning of insurance companies own coverage plan.

Usually 85-88% risks of aviation policies in India are reinsured with foreign reinsures as the capacity of Indian general insurers is limited.

Categories: News | Tags: , , , , , ,

Premium for terror cover likely to remain unaffected

Posted on July 15, 2011 by
No Comments

Serial blasts in Mumbai has claimed 18 lives and 150 injuries but Insurance industry does not anticipate any hike in the premiums of terror cover as consequence of the serial blast in Mumbai on Wednesday.

The premiums of Fire policies which include the Terrorist attacks are not expected to be hiked due to the Mumbai’s serial blasts as insurers say there has not been much damage to the properties.

Premiums of terror covers are governed by terror pool; the last time Terror pool has hiked the premium in 2009; and this time also hike in premium rates will be decided by the underwriting committee of terror pool which will also need the Insurance Regulatory and Development Authority’s (IRDA) approval.

For managing the property related risks insurers has created a terror pool after the terrorist attack in New York in September 2001.

Indian terror pool at present has the corpus of Rs 1,700 crore with the contribution by insurers over the years.

As per the norms of terror pool aggregate losses payable per location by any one or all insurers has been limited to Rs 750 crore.

Terror pool has paid the losses of Rs 400 crore in November 2008 when Mumbai suffered the terrorist attacks.

Categories: News | Tags: , ,