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GIC seeks $5 billion terror cover

Freny Patel & Debjoy Sengupta

The national reinsurer, General Insurance Corporation of India, has decided to adopt a united approach to combat the rising prices of terrorist cover in the global reinsurance market.

The current cap of Rs 2 billion available to Indian corporates has seen a number of large-sized, high-risk companies approaching the overseas market for additional cover.

GIC hopes to supplement terrorist cover up to a level of Rs 5 billion at an extra cost to meet the requirement of the Indian market.

Oil and power companies see terrorism as a real threat. With their huge plants, they are seeking additional cover above the Rs 2-billion cap.

The Tariff Advisory Committee has allowed all general insurance providers to obtain terrorist cover in excess of Rs 2 billion directly from overseas reinsurers.

However, terrorist reinsurance has simply vanished from the international market. Even if it is available, corporates have to buy it at prices that are abnormally high, at times as much as 500 per cent higher, said a senior insurance company official.

Corporates, along with their respective insurers, are having a tough time finding adequate terrorist cover. "The sky is the limit on the pricing as there is no underwriting experience or pricing pattern," a source said.

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