Terror Insurance Capped At Rs 200 Crore
The Tariff Advisory Committee (TAC) today announced that payment for terrorism cover by companies and the public would be separate from the premium paid for industrial and non-industrial risks. The maximum amount to be paid on account of loss due to terrorist attacks is settled at Rs 200 crore per location.
This change will be effective from April 1, when the global reinsurance companies renew policies. They have decided they will either exclude the risk of terrorist attacks from normal reinsurance arrangements or offer limited capacities at a higher price.
Terrorism cover will now cost an additional 50 paise for every Rs 1,000 assured in the case of industrial risks. It will be an additional 30 paise for every Rs 1,000 assured in the case of non-industrial risks. The 10 per cent surcharge, levied from October 1, 2001, will stand cancelled from March 31, 2002.
Corporate India will be hit by the new charges. Not only is the cover expensive, but even after paying a hefty premium, the Tariff Advisory Committee has decided to cap the maximum claim.
Plants like those of the Dabhol Power Company or the Reliance Petroleum, each with an individual exposure substantially exceeding Rs 10,000 crore, will be able to claim a maximum of Rs 200 crore if those are damaged by terrorists.
Reinsurance brokers stated that while the corporate would be paying 100 per cent of the premium charged as per the sum assured, in the event of any terrorist attack, it would get just about Rs 200 crore.