The country’s two largest airports — Delhi and Mumbai — are looking to double the terrorism insurance cover but face the prospect of paying higher premiums because of rising threat perceptions.
The move comes a month after three-day terrorist attacks in Mumbai on November 26 left at least 183 people dead and thousands wounded.
A source close to the development told Business Standard that following 26/11, as the terror attacks came to be called, reinsurance rates have hardened in the global markets.
“They went to the international market to take terrorism cover for Rs 1,000 crore and now they want to increase it to Rs 2,000 crore. The global reinsurers also feel that airports face a bigger threat, which leads to a hardening of rates in the international market,” said a source dealing with reinsurance of the risk.
An email sent to Delhi International Airport Ltd (DIAL) went unanswered. A Mumbai International Airport Ltd (MIAL) spokesperson said: “As of date, we are not aware of any re-insurers seeking higher premiums on the policies.”
Asked if the higher threat perception had prompted MIAL to opt for a higher terror insurance cover, the spokesperson said: “The threat perception at the airport is always high. However, against the backdrop of 26/11, additional measures are being taken to safeguard properties and assets and human life.”
At present, MIAL maintains terrorism risk insurance under three heads. For property damage and loss of profit, it has indemnity up to Rs 1,000 crore; for assets under construction and advance loss of profit Rs 750 crore; and for third-party cover $50 million. The renewal dates for its three covers are between June 2009 and May 2011.
United India Insurance Company provides a cover for property damage, assets under construction and loss of profit, and Tata AIG General Insurance for third-party liability.
Details of DIAL’s insurance cover were unavailable but Oriental Insurance is said to have underwritten the risk.
For terror insurance, General Insurance Corporation maintains a pool that covers risks up to Rs 750 crore arising from a single incident at a location. For risks beyond this, insurance companies have to procure an international reinsurance cover, for which premiums vary when the threat perception rises.
