Self insurance is the best policy for Power Grid Corporation

Venkatachari Jagannathan
07 September 2007

Chennai: If you thought corporate houses take out an insurance policy to cover various perils then it is time to change that notion, for there are companies that transfer some funds to an insurance reserve account and save on the premium outgo.

One such company is the country''s premier power transmission company Power Grid Corporation of India Limited.

The company''s assets are subject to risks like fire, earthquakes and other natural disasters, terrorist attacks, breakdowns, failures or substandard performance of equipment, improper installation or operation of equipment and others.

Says R T Agarwal, general manager (F&A), "After detailed studies of our loss experience vis a vis the premium outgo we found the company will be better off with an insurance reserve fund."

At the end of FY07 the insurance reserve fund stood at around Rs80 crore.

The company transfers 0.1 per cent of its gross block of fixed assets (except for valve halls of HVDC Bi-pole, HVDC equipments and SVC sub stations) to insurance reserve account every year. For the FY07 Power Grid Corporation''s gross block was Rs29,014 crore including the valve halls of HVDC Bi-pole, HVDC equipments and SVC sub stations.