Unlike the 9/11 attacks in the US, which resulted in companies having to shell out more for insurance covers or entities such as airlines operating without terrorism insurance, Indian companies can breathe easy. Because of the terrorism insurance pool created after the terror strikes in the US, insurers said, costs will be manageable for Indian companies and they will continue to get risk covers.
“I do not see any impact since terrorism is not new to India and now premiums are decided within the country,” said General Insurance Corporation Chairman and Managing Director Yogesh Lohiya. Earlier, global reinsurers raised the premium or often levied a surcharge after terrorist attacks as risk perception changed. This resulted in companies having to pay higher premium.
The Insurance Regulatory Developmental Authority (Irda) has mandated all general insurance companies be allied to a common pool for terrorism insurance. So, premium of terrorism insurance collected by all general insurance companies flows into a common pool. Any terrorism related insurance claim is settled by using funds from this pool.
“Terrorism insurance is offered as an add-on cover and an individual would have the choice to request the same while insuring property,” said Rajive Kumaraswami, head (reinsurance), ICICI Lombard General Insurance.
Unless Taj and Oberoi hotels had insurance policies specifically covering acts of terrorism for which they had paid an additional premium amount, the damages suffered by these hotels during the present attack will not be compensated by the insurance company, said Diljeet Titus, founder and managing partner of Titus & Co, a Delhi-based commercial law firm. ICICI Lombard is the co-insurer for Taj Mahal Hotel.
It could not be ascertained from the two hotels, which are under siege if they have terror covers or not. Lohiya, however, said losses did not appear to be significant. In any case, he said, losses up to Rs 700 crore were covered by the pool.
For additional losses arising out of a terror strike, separate protection from global reinsurers is in place.
Insurers said that with terror attacks on the rise, the number of individuals opting for terrorism insurance is on the rise. Companies such as ICICI Lombard General have advised customers to call their toll-free number to register claims arising due to the attacks in Mumbai.
