Panel suggestion on higher terrorism pool on the cards

The Terrorism Committee is expected to submit its recommendations to the Insurance Regulatory and Development Authority (Irda) on raising the terrorism pool to Rs 500 crore from Rs 300 crore.

C S Rao, chairman, Irda told Business Standard that, "With the claim-ratio being favourable so far, we do not plan to increase the premium but increase the pool size to Rs 500 crore."

R K Joshi, general manager, General Insurance Corporation of India, said that claim ratio of the terrorism pool was less than 0.1 per cent, so far. After the approval of all the members, the committee will submit its recommendations to the authority, shortly.

Joshi pointed out that the by increasing the cover limit to Rs 500 crore, the Indian industrial companies will benefit from the increased cover. The increase will enable the country to save foreign exchange outgo, he added.

The Tariff Advisory Committee had stipulated minimum eligibility norms for granting covers and also pegged the risk cap at Rs 200 crore per location. To cover a terrorism risk beyond Rs 200 crore Indian companies had to go to overseas insurance companies for cover.

It is expected that with the increase in the pool size, Indian insurance companies can cover terrorism risk at competitive rates compared to international insurers.

Rao said, "By having our own terrorism pool, it has improved the bargaining power of Indian reinsurance. At present, the international insurance scenario is far more stable when compared to the time when the terrorism pool was formed two years ago after the collapse of the international trade centre on September 11, 2001."