The bottomlines of insurance companies that have insured the terrorist-attacked hotels in Mumbai will not be affected by property damage claims as the loss will be met from a terrorism risk pool, managed by the state-run General Insurance Corp of India (GIC), say industry officials.
The claims for property damage as well as loss of profit will be met from the Rs 7.5-billion ($153 million) terrorism risk pool, they said.
However, insurers who have issued public liability policies to the Taj Mahal Palace and Tower Hotel and the Trident-Oberoi hotel, the targets of terrorists, and personal accident policies to employees with the risk of terrorism extension may have to face sizeable claims from the kin of the dead and the injured.
Though major portion of that could be reinsured, some part of the loss might have to be borne by the primary insures.
"Our liability policy covering the Trident-Oberoi hotel covers damage owing to acts of terrorism," United India Insurance general manager A Asthana told IANS.
He said all these are reinsured with GIC.
The overall liability is around Rs 100 million ($2 million) and the risk is reinsured. The maximum net impact on the company will be around Rs 50 million, Asthana said.
Sitting comfortably among the insurers of the terrorist attacked hotels is the Mumbai-based New India Assurance that has insured only the properties of the Trident-Oberoi hotel.
Since the property damages will be met from the terrorism pool, New India would remain unscathed.
A long time insurer of Taj Mahal hotel property and employees, New India this year escaped as the account was bagged by three private insurers - Tata AIG General Insurance (65 percent share), ICICI Lombard General Insurance (30 percent) and IFFCO Tokio General Insurance (five percent).
According to industry officials, it will take at least two weeks for the insurance surveyors to assess the actual financial damage as the police and other investigating authorities have first to complete their job.
What will be tricky for the insurers are the liability claims that might be filed by the kin of the dead and injured guests at the hotels.
According to sources, the companies that will be in a spot are United India and Tata AIG, which have issued public liability policies covering terrorism risk respectively for Trident-Oberoi and Taj Mahal hotels.
The two insurers will have to deal with sizeable claims under this policy as hundreds of hotel guests and visitors were killed and injured.
While United India is the sole seller of the Hoteliers Liability Policy to Trident-Oberoi, it is unclear whether Tata AIG has a co-insurance arrangement with other non-life insurers for this risk.
Tata AIG officials could not be reached.