A decade after the 9/11 attacks in the US, the Indian insurance industry has a surging ‘pool’ and is well positioned to handle terror-risk covers.
Along with insurance policies, important events today carry a terror cover. While the ICC Cricket World Cup 2011 had a cover of Rs 600 crore, the total sum insured for IPL-4 stood at around Rs 900 crore, which included a cover of Rs 450 crore against terrorist attacks.
After the attacks in the US, many countries started putting together a ‘pool’ to cater to ‘insurable’ losses. The Indian Terrorism Pool, managed by state-run General Insurance Corporation of India, was set up in 2002 with an initial corpus of Rs 200 crore. The entire premium collected under terrorism risks by the industry is deposited in the pool. This corpus is set aside by general insurance companies to ensure claims after a terror attack do not hit the bottom lines of insurers.
The pool covers companies and institutions for a liability of Rs 750 crore, including damage or loss of property.
According to recent estimates, the terrorism risk pool in India has surged to a record Rs 1,700 crore, the highest since the Mumbai terror attack on November 26, 2008. The rates are uniform across the industry and are fixed by the pool committee. “This is very good for the entire industry. The advantage of having such a pool was felt while settling claims after the Mumbai terror attack,” said Yogesh Lohiya, chairman and managing director, General Insurance Corporation of India.
