26/11 terror insurance claims exceed Rs500 crore

Though insurance companies in India had started offering customers the option of covering losses to residential and commercial properties from terrorist attacks more than a decade ago, in 2008-09 they found themselves struggling to settle claims amounting to a whopping Rs500.09 crore in the wake of in the wake of the terrorist strikes on the Taj and Oberoi hotels suffering extensive damage in the 26/11 attack.

The staggering claim, which industry sources say, will mount in the coming months after the final settlement is made, is way beyond what the industry, which shelled out half-a-crore in 2002, could have imagined. An industry expert said that they were looking at a 900-fold increase.

The sharp rise in the claimed amount last year is mainly on account of three major claims by the Taj Mahal Palace and Tower and the Oberoi and Trident hotels. Claims from the hotels alone account for as much as over 42 per cent of the total amount that insurance companies had to meet last year.

Tata AIG, which had insured the the Taj settled an interim claim of Rs130 crore as of December 2009 while New India Assurance settled claim amounts of Rs62 crore and Rs18 crore respectively with the Oberoi and Trident hotels.

Officials describe these as interim payments and the final settlements could be many times this figure.

Companies and residential societies can insure their buildings against terror attacks by taking a fire insurance policy. The Taj pays an annual terror insurance premium of around Rs15 lakh, while the Oberoi pays a premium of Rs10 lakh, and the Trident Rs6 lakh. The coverage is extended under a comprehensive fire insurance policy.