No cover for key space, nuclear projects

NEW DELHI: In an age where every possible risk is insured starting from pet insurance to terror-related covers, it is hard to believe that the most mission-critical infrastructure in India still goes without a cover.

While nuclear installations are insured against terrorism, they are not covered against accidents.

To top it all, even critical databases including citizen records do not have a cover. While the Indian Space Research Organisation’s (ISRO) Rs 400-crore satellite crashing into the Bay of Bengal was not insured, it raises questions regarding the necessity for such covers.

Analysts say that with a surge in space activities and commercial satellites expected to join the league, there is a huge potential for satellite insurance in India. “Even premium rates of 30% for ISRO and 50% for privately funded activities are unlikely to deter the sale of satellite insurance, though it will be provided largely by international insurance companies,” said a KPMG analyst.

The premium for ISRO’s rocket would have been anywhere between 20-80% of its cost, depending on factors like the rocket’s past record. “The insurance bill can be as high as one-fifth of the total cost of a satellite, with satellite building costs ranging from $200m to $400m depending on the size and other factors,” said another analyst.

High premium is the reason that the government does not provide for an insurance cover for all these high-risk policies. While the insurance of 7 nuclear power plants in the country costs Rs 6-7 crore.

The ‘hot zone’ where the reactor is located does not have a liability cover while the cold zone, has a terrorist cover, an industry tracker said. Thus, a repeat telecast of the Bhopal gas tragedy will mean that victims will again have to fight a long battle before they get any settlement.

In spite of the government’s nonchalance, insurance companies seem keen in insuring government buildings. “Even at a concessional rate, we are willing to provide insurance cover for most government buildings,” said Oriental Insurance’s CMD M Ramadoss.

The government is bound by the General Finance Rules, which do not provide for insurance for its buildings. But, with incidents like 9/11, this might need a review, feel experts.

Even as Central government buildings do not have any insurance cover, state governments do provide for insurance for some select buildings.

“In Gujarat, Kerala, Maharashtra and Rajasthan, there is a state insurance fund which insures few government buildings including electricity boards,” said Kamlesh Goyal, CEO, Bajaj Allianz.