Terror cover rates unlikely to go up: Insurers
New Delhi: Insurance industry does not see
the possibility of any hike in premium for terror cover in the aftermath of serial blasts in Mumbai that has claimed 18 lives and left 150 injured.
"We don't forsee any hike in premium rates as there has
not been much damage to properties," General Insurance
Corporation Chairman and Managing Director Yogesh Lohiya said.
According to Bharti AXA General Insurance Vice President
(Property & Engineering) Balaji Cuddapah said, "We do not see
much of an impact on the terror premium rates, which is
governed by the domestic terror pool."
For property related risks, insurers created a Terrorism
Pool following the September 2001 terrorist attack in New
York. The domestic Terrorim Pool had grown steadily with
contribution from the insurers in India over the years and
today its corpus stands at Rs 1,700 crore.
Premiums are likely to remain stable as far as fire
policy, which includes terror cover, is concerned because the damage to properties is not very high, a senior official of the private general insurance company said.
Cuddapah added that the blasts happened in commercial
areas where the exposure of Bharti AXA General Insurance was
The last time the premium rates were revised by the
terror pool was in 2009, and industry sources said there has
not been many claims to the pool.
According to the norms of the Pool, the aggregate loss payable per location by any one or all insurers has been limited at 750 crore.
According to ICICI Lombard Head Risk and Re-Insurance
Rajive Kumaraswami, "whether the rates would harden is
difficult to state at this stage and it is a decision which
the Underwriting committee of the pool would need to take,
which would need IRDA approval."
The utility of Terrorism Pool was proven in November
2008 when two hotels in Mumbai among other targets suffered
from a a terrorist attack. The Pool paid a loss of around Rs
400 crore to the affected parties.