Pact On Designing Insurance Cover For Builders
Construction Industry Development Council (CIDC) has tied up with Actuarial Society of India to design relevant instruments to assess, manage and mitigate risks involving construction sector and to help insurance companies to offer new policies covering various risks involved in the sector.
Bidding indemnity policy, delay in meeting obligation by client policy, settlement of claims policy, loss of profit policy, transit insurance policy, loss of performance of construction equipment policy, force majeure loss policy, casual workmen compensation policy, financial risk coverage policy and life of building policy has been proposed by CIDC and Actuarial Society as insurance instruments to be introduced in India.
"The primary talk with various Indian and foreign insurance companies in this direction has bore some positive results. Most of them are in principal agreed to further widen their services to cover various risk factors in the construction sector provided they should have proper data and the system of measurement to determine various details including the extent of the risk involved under various policies (as proposed) and premium rates etc," CIDC director P R Swarup said.
The council will design products in association with Actuarial Society to provide vital inputs to the insurance company to create and price the products required for insuring the construction activities, Swarup said. We will also assess those risks which can not be mitigated by insurance sector and develop product for the benefit of the construction industry. For example, pooling system can be evolved in various activities of construction business including the equipment bank," Liyaquat Khan of Actuarial Society said.
A memorandum of understanding (MoU) between CIDC and Actuarial Society in this regard will be signed today. According to the MoU, the two parties are committed to develop mathematical and statistical models involving actuarial and engineering techniques so as to profile risk and risk management processes in projects in general and construction projects in particular.
The two parties will also develop bench marks for most appropriate insurance products and will assist insurance companies to evaluate such products. "The processes or products as developed will be branded so as to reflect the joint endeavours of and ownership of CIDC and Actuarial Society," according to the MoU.The joint activities would not constitute commercial activity either by CIDC or by Actuarial Society, it added.