Gic Set To Launch Industrial All-Risk Policy In 2 Months

General Insurance Corporation will launch the long-awaited industrial all-risk insurance policy in a couple of months. The policy is considered the missing link in the corporations range of industry-related risk covers.

We are close to finalising the policy. We will launch it in the next two months, GIC chairman K C Mittal told Business Standard in New Delhi yesterday.

GIC officials are scheduled to hold a round of negotiations on the issue with representatives of different industry bodies at the office of the PHD Chamber of Commerce & Industry in New Delhi today.

This will be the second important policy for industrial consumers introduced by GIC in two years. The corporation had introduced the advance loss of profit policy to cover the risks in the pre-commissioning stages of Enron and GVK Industries power projects last year. The policy is now available to all industries.

Oriental Insurance, a GIC subsidiary, recently launched an umbrella cover for all aspects of an office.

The industry has been looking forward to the industrial all-risk policy since the GIC first circulated a draft nearly two years ago. The draft has been debated on extensively, often acrimoniously, in industry and insurance circles.

The differences between the potential customers in industry and public sector insurance companies are not yet over. These relate to price discounts, the right of a customer to choose who covers his needs and the overall pricing.

A well-run plant is forced to pay the same rates as a plant that does not abide by the safety standards. In western countries, badly run plants have to pay a higher premium.

The GIC chairman hopes to sort out the difference in the coming weeks. If industry wants an all-risk policy, it should be ready to pay for covering all equipment. If they want to select which equipment to cover, I should also have a choice on how to structure the policy, he said.

Industry has been complaining that GIC is not prepared to give customers the choice of selecting which equipment to cover in a plant.

An all-risk insurance offers three to four kinds of policies covering the entire industrial plant, including all the equipment in it. The covers include fire, electronic equipment, loss of profit with fire and workmens compensation, besides burglary and fidelity of employees. In the absence of this policy, a company is forced to buy different kinds of risk covers for different equipment and different needs. The cumulative cost is high. In the draft, GIC did not offer any price discount to a customer buying an all-risk insurance. It had indicated a price that was the sum total of the premium rates of all risk covers for all equipment and all needs.

Repeated attempts by industry representatives to persuade GIC to offer a discount on the all-risk policy failed as the tariff advisory committee ruled out a reduction in tariff on tariff-driven policies.

It is, however, prepared to allow insurance companies to reduce charges on non-tariff policies like burglary and fidelity of employees.