GIC Re, the official reinsurer of the country which also manages the terrorism pool set up exclusively to handle terror insurance, is ready to make the first installment of claim payments to both the hotels ? Oberoi-Trident and Taj Mahal Palace and Tower damaged by three days of terror attacks during last week.

?We are dealing with the situation on a war footing. We have held discussion with the insurers and have asked them to release first installments of claims to their customers during this week. We are monitoring the situation very closely. Ultimately, GIC Re has to pay the claims (maximum up to Rs 750 crore each for property damage) from the established terrorism pool,?? said a senior official of GIC Re, adding that so far GIC Re has not received any claim papers from the insurers.

GIC Re has asked its investment department to raise resources to release the initial claims.

Taj Mahal Palace has been insured by a clutch of insurers including Tata AIG (with 65% of share), ICICI Lombard General Insurance(30%), Iffco Tokio General Insurance (5%) for a total sum assured of Rs 900 crore while Oberoi Trident has been covered by state-owned New India Insurance for a sum assured of Rs 2,000 crore. However, the maximum amount which has to be shelled out by GIC Re from the terrorism pool is not for the property damage but for loss of business for both the five-star hotels. Taj Mahal Hotel is not expected to reopen before one year while the Oberoi-Trident will take more than six months to restart.

It effectively means the loss of business and profit during the whole period closure has to be factored into claims to be settled by the GIC Re from the terrorism pool subject to the cap of Rs 750 crore each.

Currently, terrorism pool has Rs 1,300 crore of corpus and has reinsurance arrangement of another Rs 200 crore which can be utilised to settle claims.

Analysts point out that if both the hotels claim the maximum amount of Rs 750 crore, the total resources of the pool will be wiped out just to settle these two claims.

However, top official of GIC Re said they are in a position to settle the maximum claims for both the hotels.

A part of Taj Mahal hotel was a heritage structure and had lots of valuable paintings and articles. GIC Re is planning to rope in a international expert to do the valuation for the treasures of the hotel.