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November 17, 2014
State-owned Indian Oil Corporation (IOC) has taken a mega insurance cover of INR50 billion (US$810 million) for each of its 10 refineries, setting a new benchmark for other domestic oil refining companies.
According to insurance industry executives, IOC renewed its cover last month with a consortium of insurance companies led by United Insurance that will cover damage resulting from fire or any natural calamity, loss of profit occurring due to business interruption and any other damage to property, plant and machinery, reported The Economic Times.
However, loss limit – the initial loss incurred due to damage to the property and which is borne by the company – is pegged at INR50 million. The co-insurers include New India Assurance, National Insurance and Oriental Insurance.
According to the terms of the insurance policy, IOC is to pay a premium of INR552.8 million per annum, marginally higher than the INR542.7 million it paid last year. Industry experts said that rates have been soft in the international market as there is a lot of capacity among underwriters who are sitting on surpluses, which helped IOC to get a good deal.
IOC received a good rate also because insurers have not incurred any claim from the company in the past few years.
The company operates refineries spread across the country with a combined refining capacity of 65.7 mmtpa (million metric tonnes per annum).