26/11 spawns a new breed of exclusive terror insurance

MUMBAI: The mass hysteria generated by the 26/11 Mumbai terror attacks has resulted in insurance companies being inundated with enquiries regarding terrorism covers. At present, terror victims can file claims under personal accident and home insurance covers offered by general insurance companies.

On Friday, The Oriental Insurance Company, in association with Optima Insurance Brokers��� online portal click2insure.com, launched an exclusive terrorism insurance product entailing a Rs 5-lakh cover (at a premium of Rs 99 per annum).

The validity of the policy lasts a year from the date of buying the cover. Since the registration process is online, the transaction cost is almost zero. The government usually generates a list of victims following such terror attacks. Once the list is produced to the company, the policy holder���s family will get the sum assured.

However, some insurers believe an adequate life policy can obviate the need for a standalone terror cover, particularly in view of the fact that the terror insurance product covers only death. Anita Pai, executive V-P (customer service and technology), ICICI Prudential, said: ���Life insurance covers death occurring under any circumstance, which includes terrorism-related incidents.��� P Ravi Kutumbarao, head, claims, Bajaj Allianz, added: ���As it covers all types of death, except for suicide, during the first year, a separate terrorism cover is not required.���

There are other insurance options available in the market that cover the risk of terrorism. One of those is a personal accident insurance and another is a simple term plan with a personal accident rider. If an individual opts for a personal accident cover worth Rs 5 lakh offered by general insurers, the premium works to around Rs 1,875 for 3 years, Rs 2,500 for 4 years and Rs 3,125 for 5 years. It also covers permanent total disability apart from accidental death. In the case of a term cover of Rs 20 lakh for 20 years, the premium could amount to Rs 7,755 a year with the accidental death benefit cover of Rs 5 lakh (Rs 7,010 without accidental death benefit).

General insurers feel there is scope for additional insurance as Indians are grossly underinsured. Adequate insurance amount is around 100 times an individual���s monthly income. This apart, general insurers also offer personal accident cover in India, but they haven���t gained popularity till now. ���The cover hasn���t picked up much as insurers don���t push it aggressively. Although it���s a low-cost product the commission structure is unattractive which keeps the brokers away,��� said an official with a general insurance company.

Experts say the financial aid offered by the government is inadequate and comes with a time lag, thus necessitating an exclusive terrorism cover, especially for the middle class and lower middle class families. Rahul Aggarwal, CEO, Optima Insurance Brokers, said: ���Except for the recent attack on luxury hotels Taj and Trident in Mumbai, the pattern of attacks show that victims mostly hail either from a middle class or lower-middle class family.

Hence, the size and timing of monetary compensation becomes critical. Also, the unpredictable nature of these attacks makes it difficult to assess an individual���s risk. Besides, at such times, saving their lives is not in the hands of the victims. This calls for an even specific cover and an affordable cover such as this terrorism cover.���