Officials said that the Indian Market Terrorism Risk Insurance Pool, formed as an initiative by all the non-life insurance firms in India in April 2002, is adequate to tackle any eventuality.
The Terror attack in Paris is likely to prompt many mid-sized companies to consider taking terrorism insurance cover, according to senior officials in the sector.
While the insurance industry doesn’t expect any major fallout, officials said it makes sense for many small and mid-sized corporates to look at suitable cover. “We don’t expect any increase in terror insurance premium. Big corporates have already taken cover. Medium-sized corporates may now go for terror cover. In Paris, there were human casualties but buildings and properties were not affected,” said G Srinivasan, chairman and managing director, New India Assurance.
Officials said that the Indian Market Terrorism Risk Insurance Pool, formed as an initiative by all the non-life insurance companies in India in April 2002 after terrorism cover was withdrawn by international reinsurers post 9/11 attacks, is adequate to tackle any eventuality.
According to an insurance official, major religious places and monuments are already covered. Many big corporates have gone for stand-alone cover outside the terror pool.
The pool, which is applicable to insurance for terrorism risks under property insurance policies, started with a small size of Rs 500 crore and has already crossed Rs 4,500 crore. Its members include all Indian non-life insurance companies and GIC Re, which administers it. The pool capacity per location has been increased to Rs 1,500 crore against the previous level of Rs 1,000 crore. New add-on coverage for start-up expenses and alternative accommodation has been included in the pool coverage.
Similarly, the pool offered limit of indemnity of Rs 750 crore per location for terrorism risk cover till March 2012. From
April 2012, the limit was increased to Rs 1,000 crore per location. Premium rates for terrorism cover, which were revised upwards from April 2009 after the losses reported from 26/11 Mumbai terrorist attack event, and subsequently were reduced from April 2012.
According to the Insurance Regulatory and Development Authority (IRDA), the pool’s premium income decreased from Rs 482.53 crore in 2012-13 to Rs 471.13 crore in 2013-14, which is a decrease of 2.36 per cent. The claims paid by the pool during 2013-14 was Rs 2.22 crore. This is because after the Mumbai attacks in 2008, no major losses were reported to the pool.
Travellers are also likely to be cautious in the aftermath of the Paris attack, said officials. “I don’t expect any surge in travel insurance. It’s mandatory to take travel insurance while travelling to Europe, the US and many other countries. Overall, I don’t expect any major impact from the Paris attack,” said Bhargav Dasgupta, MD & CEO, ICICI Lombard General Insurance.
The insurance sector and India Inc suffered a big loss in the 2008 Mumbai attack. While total business losses were around $100 billion, insured losses were $ 111 million, says Lloyd’s. This loss was on account of the damages in Taj Mahal Hotel and Oberoi Hotel. Total insured losses from the terrorist attacks on the World Trade Centre in New York City and the Pentagon are about $43.4 billion (at 2014 rates), including property, life and liability insurance claim costs. Insured property loss was $25.12 billion.
A total of 2,976 people perished in the September 11, 2001, terrorist attacks in New York, Washington and Pennsylvania, excluding the 19 hijackers. In the bomb explosion in NatWest tower in London, insured losses amounted to $ 12.1 billion, according to Insurance Information Institute.