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March 30, 2015
Energy major ONGC has driven a hard bargain to renew its re/insurance cover, at around USD 20 million — a record discount of 40 per cent — for its offshore assets valued at USD 34 billion from the London reinsurance market.
While the state-run United India Insurance continues to be the lead primary insurer, two global rensurers- Endurance and Aspen — have outbid India’s sole reinsurer GIC Re to be the lead reinsurer for the deal. . The insurance cover, due for renewal on May 11, is currently getting placed in the the London markets, sources in the London market said. “ONGC has renewed its insurance account for its offshore assets worth USD 34 billion for a premium of around USD 20 million, more than 35 per cent lower than what it had paid for existing cover of USD 33 million,” said industry sources. .
ONGC, which holds the biggest insurance policy in the country at USD 33 million, had earlier floated a tender where global underwriters had competed with each other to be the reinsurer of the company. The Chennai-based United India Insurance along with other public sector non-life insurers has been covering the oil and gas major for the past three years, Global reinsurance prices have been heading south as there has been a glut of capital and claims have been lower in recent years. The capital in the global reinsurance market grew to USD 575 billion including USD 64 billion deployed in alternative capacity (capital from pension funds and hedge funds)—both records in 2014. .
Air India paid USD 27 million for its cover in the outgoing fiscal, making it the second biggest account. The cover for large corporates like Reliance Industries, Jet Airways among others are about to be renewed and they may get benefit of the softening general insurance market. However, airlines may be forced to shell out more following the last week’s Germanwings airline crash.