Even as suicide bombings sent shock waves across the international arena following attacks in Morocco and the Saudi capital of Riyadh, Indian corporates remain indifferent to the threat perception.
A majority of them do not have a cover against terrorism. The General Insurance Corporation of India received just a handful of enquiries for higher terrorism coverage up to Rs 500 crore (Rs 5 billion), after it managed to enhance the coverage available.
The domestic terrorist insurance pool set up by the general insurance industry last year mopped up under Rs 300 crore (Rs 3 billion) in premium income during fiscal 2003.
This proves that few corporates have taken international terrorist activity seriously or prefer to insure themselves.
Small and large-sized companies had informed their insurers that they would not be interested in taking terrorism cover as it was too highly priced.
This is also because there is no fear psychosis in India Inc, though there have been a few terrorist attacks.
GIC paid out Rs 9-10 crore (Rs 90-100 million) from the pool in fiscal 2003 when Digboi Refinery came under attack by the ULFA (United Liberalisation Front of Assam) in Assam.
Similarly, Coca-Cola put in a claim following an attack by Naxalites at its plant in Andhra Pradesh.
Yet, by and large, most sectors choose not to come under the terrorist insurance pool, which caps the coverage at Rs 200 crore (Rs 2 billion), or approach the international market for higher cover.
The Tata group of companies, among a host of other large corporate houses, prefers to self-insure their plants.
Said a senior official of a large steel plant: "Indian corporates are not really worried as they do not perceive corporate premises to be targets of terrorists. They (the ultras) target things owned by the government or where disruption in services can cause major damage."
Public sector oil giants and some power companies see terrorism posing a major threat to their operations.
The shipping and aviation industries are under threat and take cover before commencing any voyages.
Corporates also look at the cost-benefit factor. Terrorism cover is priced at Rs 0.5 per Rs 1,000 sum assured, even as the maximum coverage is limited to Rs 200 crore Rs 2 billion).
As such, a plant insured for a sum of Rs 800 crore (Rs 8 billion) ends up paying at least Rs 52-odd lakh (5.2 million) for the terrorist cover alone.
Should there be a terrorist attack on the premises, the maximum claim will be Rs 200 crore even if the damage exceeds the amount.
For additional Rs 300 crore (Rs 3 billion) coverage from GIC, the cost goes up considerably, and there is no flat rate. Much depends upon the location of the plant and whether it manufactures some hazardous material.
Industries and corporates located close to the Pakistan border such as Reliance Industries have taken additional cover overseas.
Even as GIC has procured the enlarged coverage up to Rs 500 crore (Rs 5 billion), these corporates and industries in the manufacture of hazardous chemicals and goods will pay a higher premium.
The loading on the premium varies in accordance to a "scheduled risk table" identified by international reinsurers.
