September 12, 2014
Insurance companies including New India Assurance and General Insurance Corporation are expecting a combined loss of INR6.5 billion (US$107 million) from a fire that broke out at Mittal-Hindustan Petroleum refinery in northern India in June.
In comparison, the 2011 terror attack on the two Mumbai hotels, the Taj and Oberoi, had led to insurance claims totalling INR5 billion. However, those claims were paid out of a national terrorism pool whereas insurers will have to pay for the refinery fire losses themselves, reported the Economic Times.
The refinery was insured for INR75 billion under a mega risk policy which also covers loss of profit due to business interruptions. New India Assurance, which is India’s largest general insurer, is the lead insurer with a 75% share in the policy. A New India Assurance executive said that surveyors are assessing the loss and added that the company could pay out up to INR500 million.
Other insurance companies involved include United India and SBI General Insurance. India’s national reinsurer GIC Re is the lead reinsurer in this instance.
Mr A K Roy, Chairman and Managing Director of GIC Re, said that the expected claim of around INR6.5 billion from the vapour fire explosion is the biggest in recent times. He said: “We have provided reinsurance and have got protection against it. Our exposure can go up to INR1 billion.”
The fire had broken out in vacuum gas oil treating unit of the refinery. According to media reports, a statement issued by the company had said that there was no casualty or injuries of any kind.