General Insurance Corporation to Cut Terror Cover Cost, Doubles Limit to Rs 1,500 Crore
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Modified 08 April 2014
GIC has doubled the limit of terror cover and decreased the terror cover cost. It is offering a cover of up to Rs 1,500 crore now.
MUMBAI, 4th April, 2014: The cost of terror cover will be decreased and limits under the national terror insurance pool will be increased as per the decisions of National reinsurer General Insurance Corporation (GIC Re). For discouraging insurance brokers from placing business in the international market, they would be paid commission by terror pool.
A cover up to Rs 1,500 crore will be offered by GIC now. Five years back, GIC was offering half of this. As there were not many major claims after the terror attacks of November 2008 in Mumbai, the rates have been lowered.
The chairman of GIC, A K Roy said that in terror insurance, overseas underwriters are undercutting them but brokers without verifying are placing business overseas whether claims are likely to be paid. In an incident, an international underwriter didn't settle a large Indian business house's terror insurance claims despite losses following a Naxalite attack.
Terror has become an excluded risk from all insurance plans after the attacks of 9/11 in 2001. International reinsurers had also stopped providing a cover for any losses on account of terror attacks. Rates have softened and the global market has opened up since then. GIC is offering commission to brokers who bring terror insurance business for placing business in India. While speaking to news persons at the inauguration of GIC Housing Finance's new head office in Mumbai, Roy said that there is an increase in GIC's share of international business from 45% to 50%. To add stability to the business, the corporation was willing to diversify its business from various markets.
To get a foothold in the world's largest reinsurance market, the corporation is on the lookout with Lloyd's membership for an acquisition of a reinsurance company.
GIC has a share in most aviation claims as a part of a consortium of aviation underwriters. It also had a share of 3% in the missing Malaysian Airline flight No. MH 370. The main underwriter of the airline is Germal insurer Allianz as per the news reports and the process of making payments on the claim has already started.
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