UPDATE: Mumbai Attacks May Raise Insurance Premium In India
Wednesday December 3rd, 2008 / 9h49
(Recasts lede; adds details on terror fund, quotes from industry executive) NEW DELHI -(Dow Jones)- Indian consumers may have to pay more for protection against possible terrorist attacks as insurance companies may raise the premium on risk covers after the serial attacks in the financial hub of Mumbai last week that left over 188 dead. Indian insurance companies contribute the premium they charge on providing cover against terrorism to a common fund, from which all terror-related claims are paid. Insurance firms may raise the premium to expand the size of this corpus, now around INR7.5 billion ($150 million), over half of which may be used to settle claims from the recent terrorist attacks, analysts said. "The rate of premium will depend on the type of products that come up. It may go up depending on the underwriting risk," J. Hari Narayan, chairman of the Insurance Regulatory and Development Authority, India's regulator for the insurance sector, said. The terror corpus, created after the Sept. 11, 2001, attack on the World Trade Center in the U.S., is managed by General Insurance Corporation. "There is capacity to increase the terror pool. It will depend on how much more insurance is purchased," Narayan said. The Taj Mahal Palace & Tower and the Trident Oberoi luxury hotels in Mumbai's main business district bore the brunt of the attacks that lasted over three days. "So far there have hardly been any claims (from the Mumbai terror attacks). It's too early to say anything (on the extent of insurance claims)," Narayan said. Many insurance companies offer terrorism cover as a part of personal accident and group policies and all those claims will have to be borne by the insurance firms themselves, said a senior executive at Tata AIG General Insurance Co., who asked not to be named. "If the claims are within the corpus of the terror pool, it won't hurt the companies," the Tata AIG executive said. The terror premium rate will certainly go up when companies renew their insurance policies and customers may have to pay more, the executive added. -By Gaurav Raghuvanshi and Mukesh Jagota, Dow Jones Newswires; 91-11-43563300; chandrasekhar.jayachandran@dowjones.com Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/al?rnd=DhiqXiPFgwaKAmv0bXc80w%3D%3D. You can use this link on the day this article is published and the following day.
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