N insurance pool: Foreign cos interested to pitch in, says GIC

With the Indian nuclear insurance pool falling short by Rs 600 crore towards becoming operational, some foreign companies have shown an interest in being a part of the initiative.
"We have pursued some overseas players and have received good response. We are seeking their response on how to go about it.
"We are also pursuing private sector companies... Six companies came with Rs 150 crore. Now, it has become 900 crore. We are putting all our efforts into raising the remaining Rs 600 crore for operationalising the pool," said Y Ramulu, GM of General Insurance Corporation (GIC) of India.
The Civil Liability for Nuclear Damage Act, 2010, prescribes that the nuclear insurance pool be made operational with funds of Rs 1,500 crore.

Clauses in the Act which give the operator the Right to Recourse and allow it to sue the suppliers in case of any accident were seen as being a major hindrance to the growth of the nuclear industry. These concerns led to to the formation of the Indian nuclear insurance pool.
"We have developed the policy and conditions based on the covers available overseas and we shared these terms of conditions with policy operators. The premium rates are too more or less based on the overseas rates," added Ramulu.

GIC said that apart from the RS 150 crore from the six domestic player, some government insurance companies have pooled in Rs 750 crore, taking it to around Rs 900 crore. Thus, Rs 600 crore is now required to operationalise the pool.

Ramulu said that the six domestic companies are: ICICI Lombard, Reliance General Insurance, SBI General Insurance, Iffco Tokio, MS Cholamandalam and Universal Sompo General Insurance have together pooled in Rs 150 crore until now.
The government was also initially toying with the idea of a catastrophe bond, but Ramulu said that may not take off anytime soon.
"Such bonds have takers in countries that have lesser interest rate. When banks and other financial institutions offer interest rates of more than 8 per cent, then why will someone take these bonds.
"We are also hoping for government support in this case," Ramulu said.

Catastrophe bonds emerged out of a need by insurance companies to alleviate some of the risk they would face if a major catastrophe occurred as that would involve clearing damages which they could not cover by the premiums and returns from investments using those. The concept of catastrophe bond is seen in the US and Europe.
Sources said the government may throw in sovereign guarantee to address the concerns of foreign suppliers over the nuclear liability law.