Reinsurance comes to aid of Aban Pearl insurers

Insurers of Aban Pearl, the natural gas exploration vessel that sank off the cost of Venezuela, would be spared heavy claims as they had placed 90 per cent of the risk with reinsurers.

The insurers, ICICI Lombard, United India and New India Insurance, will take the remaining hit.

“The rig, Aban Pearl, was covered by us to the extent of 75 per cent. There is reinsurance in place and there will be no material impact on our books on account of the loss. We have informed the reinsurers about the loss and they will advise us on the next steps,” said an ICICI Lombard spokesperson. United India had insured 15 per cent of the risk and New India the remaining 10 per cent.

The three had heavily reinsured the rig. A senior ICICI Lombard executive said Lloyd’s syndicate and others had reinsured 90 per cent of the risk.

The policy is divided into two parts — hull and protection and indemnity cover. The hull policy covers physical damage to the rig whereas the protection and indemnity cover takes care of the liabilities. The rig was insured for $250 million, while the liability cover was around $100 million. Sources said the company paid $8.5 million, or Rs 40 crore, for the cover.

The company said at the time of the incident, the rig was being manned by 95 personnel, all of whom were evacuated. In a filing to Bombay Stock Exchange, the company said “causes of sinking are not known at this stage”.

While there is no estimate of the total claim, the company said it was assisting in the assessment and investigating the cause of the accident.