IRDA Plans to Increase Corpus of Terror Insurance Pool
Dec. 5 – In light of India being the target of several terror attacks in the recent past, the Insurance Regulatory and Development Authority (IRDA) has said that they are considering increasing the corpus of the common terror insurance pool, upgrading insurance products and changing the rate of premia.
Created post the attack on the World Trade Centre in 2001 the pool has a corpus of over Rs 1,000 crore (US$200 million), and allows an insurer to withdraw to the extent of Rs 750 crore (US$150 million) per location. The insurance regulator is now seriously considering increasing this corpus due to increased vulnerability.
IRDA chairman J Hari Narayan told the Hindu that the insurance pool, created at the behest of the IRDA for the non-life sector, would grow as insurance companies were bound to be buffeted by growing claims.
While loss of life due to terrorist strikes is already covered by most life insurance policies, Mr. Narayan told the Hindu: “Terror insurance products are bound to be upgraded and the rate of premium might change depending upon the evolution of new products that the industry may come up with.”
The Indian insurance sector, a growing industry is undergoing several changes.In the short term the industry is looking at improving customer satisfaction by speeding up the claims process, outsourcing non-core activities and improving distribution through e-sales, e-marketing and payment of premium through re-charge coupons.
The insurance sector which currently includes 21 life insurance companies and 20 non-life insurance companies is also in the process of finalizing a framework for mergers and acquisitions (M&A), the draft of which is expected to be completed by early next year.
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