July 31, 2015
The Indian Home Ministry has written to various ministries asking them to look at insuring critical assets. The insurance cover will help in reinstating the assets immediately after a natural disaster without the government having to arrange for unplanned expenditure. .
The ministries concerned include those overseeing the power, steel, water resources and aviation sectors, among others. At present, most government assets are not covered by insurance. This is because given the high total value, the assets would be uninsurable. Also, the cost of providing cover to iconic structures is high, reported The Economic Times. Given the limitations, the government is not seeking an “all risk” cover but rather insurance to compensate for the cost of reconstruction in the event of a natural disaster. .
“The Home Ministry has recently written to all central ministries asking them to explore the possibility of insuring their critical assets against natural disaster perils,” Mr R Chandrasekaran, Secretary General of the General Insurance Council, told The Economic Times. Some of these assets would include the Parliament building, electrical installations, water pipelines, ports, airports and railways. Many of these assets are large legacy assets which have never been valued. “In most natural disasters in India, the level of claims paid out is very low. This is because most losses are to government assets or to those living below poverty line,” said an insurance official. Sources said that several ministries have drawn up a list of assets and are estimating the cost of reconstruction.