Oriental renews SCI cover at 32% higher premium

Oriental Insurance Company (OIC) renewed Shipping Corporation of India's (SCI) entire fleet for 2006-07 for a premium of Rs 17.88 crore, 32 per cent higher over Rs 13.51 crore charged in 2005-06.

The marine hull and machinery insurance policy, which is renewed every July, will cover SCI's fleet of 83 ships.

"The hike in premium was owing to a bad claims experience last year," said M Ramadoss, chairman and managing director of OIC.

In 2004-05, SCI had insured its fleet for about Rs 34 crore, but had to pay 60 per cent less in 2005-06 as general insurers indulged in cut-throat competition after the Insurance Regulatory and Development Authority (Irda) freed marine hull insurance from premium controls. Marine hull insurance premium had fallen by over 50 per cent across the industry.

The sharp fall in marine hull insurance premium had led to General Insurance Corporation (GIC) declining to reinsure risks. As per Irda norms, general insurers have to reinsure minimum 20 per cent of their risks with GIC. After GIC refused to reinsure marine hull risks, several insurers had to reinsure overseas.

A senior SCI executive said Oriental Insurance has secured the contract at "competitive rates". SCI is planning to acquire 35 new vessels at an estimated Rs 6,300 crore during 2006-07, in addition to orders already placed.

"The company has chalked out a plan to acquire 72 vessels with an investment of Rs 13,300 crore by 2011-12. SCI will also explore opportunities of inorganic expansion by the way of joint ventures and consortium arrangements," added the official.