Terror insurance in India is growing bigger. With many public and private sector companies and landmark buildings and temples queing up to buy the cover, the Indian terrorism pool has now swelled to Rs 4,600 crore.
The pool, set up to provide terror insurance, is growing 25% annually.
The annual premium collection for this insurance cover in the country is about Rs 700 crore. This does not include standalone covers bought by big companies like Reliance or Essar and oil companies. The government-owned reinsurance company, GIC Re, is managing the pool in the country.
For starters, a reinsurance company is an insurer's insurer. Insurance companies minimise their risks by covering their policies with a reinsurance company.
The 2008 Mumbai terror attacks saw the largest claim on the pool – with the total claim settled touching around Rs375crore.
GIC Re chairman Ashok Kumar Roy told dna, "Companies and institutions now realise the need for a terror cover after the 2008 attacks. The premium collections are also climbing with the annual figure at Rs 700 crore. Public and private institutions, temples and hospitals are all buying terror cover."
Dharvesh Panchal, vice president, Prudent Insurance Broker, told dna, "Since the pool is profitable, terror insurance rates are set to fall further, encouraging more companies to go for terror cover. The standalone terrror insurance market is also growing."
Since 1984, there have been 58 terrorists attacks in the country, with 1,871 fatalities. After the 2008 attack, terrorism hit Mumbai again on July 13, 2011. A series of bomb attacks took place at Opera House, Zaveri Bazaar and in Dadar West, which left 26 people dead and 136 injured.
The diamond markets were the worst affected. The most recent terrorist strikes were the Chennai train blast and the bomb blast in Church Street in Bengaluru – both in 2014.
A senior official from New India Assurance, which provides terror cover for leading companies like Reliance and Essar, said: "Most Indian temples and landmark buildings today have a terror cover."
Until 2001, India had no terror pool. The country only had a cover for riots, strikes and malicious damage cover called RSMD. After the World Trade Centre attacks and the Pentagon on September 9, 2001, global reinsurance companies withdrew cover for Indian companies, forcing domestic insurance companies to set up a terror pool.
The terror pool cover limit was increased from Rs 1,000 crore per event per location to Rs 1,500 crore per location from April 2014. The premium for the cover was lowered with effect from April 2014. Insurance Regulatory Development Authority (IRDA) is planning to be reduce it further so that domestic companies can go for a larger cover.
According to a senior New India Assurance official, "Terror cover is generally sold as part of fire policy and it can be an add-on or a standalone cover. Many large companies like Reliance, Essar and oil companies have a standalone terror cover, which is renewed every year."
The Indian Market Terrorism Risk Insurance Pool was an initiative by all the non-life insurance companies in India in April 2002, after terrorism cover was withdrawn by international reinsurers after September 9, 2001.
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