Cost of terror insurance unlikely to shoot up

NEW DELHI/MUMBAI: The cost of buying insurance against terrorist acts is unlikely to rise even after Tuesday’s blasts, say insurance companies.

Unlike terror acts in developed markets, Tuesdays events have not resulted in any property insurance claims. Secondly, most of India’s terror insurance comes through a ‘terrorism pool’ — a virtual fund created by the domestic insurance companies after global reinsurers withdrew in the wake of 9/11.

RK Joshi, chairman, General Insurance said, at present, the pool could provide cover of up to Rs 600 crore per policy. If the non-life insurers decide, they can increase the limit further.

Kamesh Goyal, CEO, Bajaj Allianz General Insurance told ET he did not expect reinsurers to hike rates for providing terrorism cover to large projects because they have not incurred any claims in respect of terrorism so far. According to MK Garg, chairman, United India Insurance, the overall risk perception would not change for property insurers and therefore reinsurance costs are also unlikely to go up.

Non-life insurers say that they do not expect any property insurance claim on account of the blasts. Insurers point out that most of the losses in recent months have been on account of natural disasters such as floods. Life insurance companies, meanwhile, have promised speedy claim settlement in respect of policies taken out by the victims.

According to ICICI Prudential Life Insurance, claims will require a three-step procedure. These include; Copy of death certificate / proof issued by BMC (Bombay Municipal Corporation) or hospital. In case of disability – hospital proof. An intimation by the claimant alongwith the policy document and a copy of photo identity proof of the claimant.