Sivakasi cracker unit insured for Rs 60 lakh
New India Assurance sends surveyor to site to estimate losses
The ill-fated factory of Om Siva Sakthi Fireworks, which was gutted yesterday leading to deaths of over 50 persons, was insured for Rs 60 lakh by New India Assurance. The insurer has sent a surveyor to the site to determine the losses.
While the factory building was insured for Rs 25 lakh, a Rs 35 lakh cover was taken for the stock (crackers and raw materials). The premiums were paid for by the owners of the company.
A senior official of New India Assurance said: the question of claim would arise only if proper terms and conditions were followed by the insured. “We have deputed a surveyor to inspect the location yesterday. We will proceed towards settlement after the procedure is completed and the report is prepared. The surveyor will visit the factory, consult others, check if proper procedures were followed and later prepare the report.”
Industry experts said fire insurance, especially for properties like firecracker factories, are an extremely risky proposition. “Properties such as firecracker factories are insured for very small amounts.” “Licences of some factories like the one at Sivakasi may have expired. However, if the licence was valid at the time of the beginning of the insurance period, it is difficult to do anything,” said an executive of a public sector general insurance firm.
The executive said in several cases, insurance was also given on the ‘trust factor’, as it was not possible to verify each and every aspect of the factory very closely. “If it is a big entity, verifications are easy. It is difficult if it is an unknown entity,” he added.
Detariffing of the insurance sector began in 2007. Under the detariffing regime, individual insurance companies are allowed to decide the pricing of policies, based on scientific analysis of historical data and perceptions of risk.
Detariffing for motor and fire insurance was ushered in in January 2007. This led to huge discounts, especially for corporate clients. In a recent communication to the four state-owned general insurers, the finance ministry asked them to do away with the practice of giving massive discounts to grab market share.
Fire insurance covers all properties on land (excluding cost of land), moveable or immovable, at various locations against named perils. Special policies are designed for stocks (declaration and floater), building, plant and machinery keeping in mind the nature of property. If there is an accident, one needs to intimate such loss/damage immediately so that a competent surveyor may be deputed to minimise the loss. It includes giving an account of all properties damaged with estimated amounts of loss, and particulars of all other insurance covers existing on the property at the time of loss.