The Indian Market Terrorism Risk Insurance Pool is likely to see an uptick in capacity with a rise in global terror incidents.
According to insurance officials, the size of the pool, currently at Rs 1,500 crore (Rs 15 billion), could go up to Rs 1,800 crore (Rs 18 billion).
The pool was formed as an initiative by non-life insurance companies in India in April 2002, after terrorism cover was withdrawn by international reinsurers’ in the aftermath of the 9/11 attack.
The pool has thus completed 13 years of successful operation.
“The pool size is likely to be raised in 2016 with the rise in terror activities and India facing higher terror risks,” said a senior industry executive.
All non-life insurance companies of the country and General Insurance Corporation of India are members of the pool.
GIC Re administers the pool. The pool is applicable to insurance of terrorism risk covered under property insurance policies.
With few claims, the premium income has fallen from Rs 482.5 crore (Rs 4.82 billion) in 2012-13 to Rs 471 crore (Rs 4.71 billion) in 2013-14, according to the Insurance Regulatory and Development Authority’s annual report for 2013-14.
According to industry officials, on an average claims worth Rs 3 crore (Rs 30 million) are paid in a year.
These are mostly related to small damages on account of militant activities.
Till March 31, 2012, the pool offered indemnity limit of Rs 750 crore (Rs 7.5 billion) per location for terrorism risk cover.
From April 1, 2012, it was raised to Rs 1,000 crore (Rs 10 billion) per location, which was subsequently increased to Rs 1,500 crore (Rs 15 billion) from April 2014.
Irdai had allowed a brokerage/agency commission up to five per cent on terrorism premium for business procured through brokers and agents.
It has now proposed to revise the insurance pool’s capacity per location, rates, deductibles and terms and coverage.
This comes in the wake of a rise in attacks by the Islamic State and terrorist attacks in locations such as Beirut, Paris, Nigeria, Iraq and California.
Image: Terrorists had attacked the Taj mahal Hotel in Mumbai in 2008. Photograph: Reuters
