The November 26, 2008, attacks have made business houses more aware of the need for terror insurance.
“There has been an increase in the number of customers buying terrorism risk cover,” said Anuj Tyagi, head (corporate, rural and agriculture business), HDFC Ergo General Insurance. “The maximum cover provided under the Indian Terrorism Pool is Rs 750 crore. However, there is an increase in the preference for higher cover proportional to asset sizes.”
General insurance companies formed the pool for terrorism risk in 2002 when international reinsurance markets withdrew this cover after the September 11, 2001, terrorist strikes in New York. In 2008-09, the pool suffered its biggest loss — around Rs 500 crore — since two of the 26/11 attacks were at five-star hotels. The led to a rise in terror cover premium rates.
“Earlier, terrorism cover was limited to large corporations or industry houses. Now, companies with even smaller exposures want terrorism cover,” said TA Ramalingam, head (underwriting), Bajaj Allianz General Insurance.
Not just manufacturing firms, but firms across sectors and locations are taking this cover.
“The requirement has been increasing for projects such as roads, power plants and irrigation plants. Corporations are also taking cover for the loss of revenue due to interruptions in business due to terrorism,” said Ramalingam.