IRDA proposes increasing terror risk insurance pool

The Authority is likely to increase the Indian Market Terrorism Risk Insurance Pool due to changing circumstances

Insurance Regulatory and Development Authority (IRDA) is likely to increase the Indian Market Terrorism Risk Insurance Pool due to changing circumstances.

The pool's premium income has decreased from Rs 482.53 crore in 2012-13 to Rs 471.13 crore in 2013-14, a decrease of 2.36%, according to IRDA's annual report 2013-14.

The Indian Market Terrorism Risk Insurance Pool was formed as an initiative by all non-life insurance companies in India in April 2002, after terrorism cover was withdrawn by international reinsurers' after 9/11.

Claims paid by the pool during 2013-14 stood at Rs 2.22 crore and no major losses were reported to the pool during the year, it said.

"The Authority allowed a brokerage/agency commission up to 5% on terrorism premium for business procured through brokers or agents. It is now proposed to revise the pool's capacity per location, the rates, deductibles and terms and coverage," it said.

"The pool capacity per location has been increased to Rs 1,500 crore against the previous level of Rs 1,000 crore. New add-on coverage for start-up expenses and alternative accommodation has been included in the pool coverage," the report stated.

All Indian non-life insurance companies are members of the pool while the state-owned GIC continues to administer the pool, which is applicable to insurance of terrorism risk covered under property insurance policies.

The pool offered limit of indemnity of Rs 750 crore per location for terrorism risk cover till 31st March, 2012. From April 1, 2012, it was increased to Rs 1,000 crore per location and subsequently increased to Rs 1,500 crore from April 2014.