The Hindu : Business : Taj Hotel insured for over Rs. 1,000 crore

Online edition of India's National Newspaper
Wednesday, Dec 03, 2008
ePaper | Mobile/PDA Version

Business

Business

Taj Hotel insured for over Rs. 1,000 crore

A. Saye Sekhar

2.5 lakh companies take terror insurance.

HYDERABAD: How much could the Taj Hotel in Mumbai have been insured for? This is an interesting question engaging the minds of one and all, for can any insurance company compensate the loss?

While several appraisers are now assessing the loss in the Taj and Trident-Oberoi, the insurers will quantify the loss. Terror insurance not only covers loss of or damage to property, but also business interruption loss (BIL).

Terrorism pool

General Insurance Company (GIC) manages a pool of fund for terror insurance of Rs. 1,200 crore as mandated by the Insurance Regulatory and Development Authority (IRDA). In fact, the India Market Terrorism Pool (IMTP) was set up in 2002 with a sum of Rs. 200 crore after the attack on the World Trade Centre (WTC). “Whatever amount is left with the non-life insurance companies in the country — both public and private sectors — is deposited in the pool,” according to Ram Prasad, General Manager, GIC, Mumbai.

The pool actually covers companies/institutions for a liability of Rs. 750 crore, including material or property loss or damage and also BIL, he says. Bigger companies, which need coverage of more than Rs. 750 crore, go to the international market for insuring their properties through a competitive bidding process. For instance, the Taj Hotel is insured for over Rs. 1,000 crore, according to him. So far, over 2.5 lakh companies/institutions have taken coverage under terror insurance from the pool and claims settled are just around Rs. 15 crore, says Mr. Prasad. The IMTP is formed in response to the reaction of world reinsurance market that withdrew all terrorism protection following 9/11 WTC attack, according to Krishnan Venkatachary, Chief Operating Officer, Flagstone Underwriting Support Services (India) Pvt. Ltd. The terror insurance protection will be solely on the re-insurer’s terms and premiums, depending on the analysis and perception of the risk proposed.

Asked if personal accident insurance also covers terror attack, Rajive Kumaraswamy, Head of reinsurance at ICICI Lombard, says it can be given for property or personal accident with an add-on premium and the number of individuals opting for terrorism insurance is on the rise.

Printer friendly page
Send this article to Friends by E-Mail

Business