Leading Indian insurance companies have decided not to accept fresh business and have started calling back war risk cover to their clients.

This is despite the war risk committee of Lloyds of London sending out "advice" to insurance companies worldwide not to recall cover as it would create undue panic in the current situation.

The Lloyds committee, a syndicate of reinsurance companies that sets war risk premiums, is meeting on a daily basis to take stock of the situation.

Insurance brokers said despite the war in Iraq, global insurers are not seeking to deny coverage even though one needs to take prior approval on a case-by-case basis. International reinsurers have not issued any notices of cancellation but are charging a higher war risk premium on cargo and vessels venturing into war-stricken waters.

However, some Indian insurers have advised their offices "not to cover war risk for the overseas transit with immediate effect." The directives were issued on March 25.

According to the state-owned New India Assurance Company, war risk cover has been denied to the Gulf ports and places lying west of 56 10E, the Ivory Coast and Iraq as well as vessels or voyages which touch or are en route to these ports or territorial waters.

Denial of cover in these areas is based on the war committee having put marine cargo and voyages to and from the Persian Gulf in the "held cover" category. This implies that the coverage is available to clients at the discretion of the insurance company, and reinsurance support would be granted on a case-by-case basis.

Shaun Shonchattra, director, Asia Marine Prentis Donegan, a Lloyds registered broker, confirmed on Wednesday that they have not issued any notice of cancellation to their clients in Asia, including India till now.

"We are providing hull and cargo war cover even in the notified sensitive areas, based on merits and depending upon the client profile," he added.

The Indian industry is over-reacting, said a senior insurance broker as there have been no cancellation of covers to date in the global reinsurance market. In the private sector, Bajaj Allianz General Insurance Company continues to offer war risk cover to its existing clients.

"There are a few corporates to which we have granted cover and which are moving their cargo through the Suez Canal," said the company's chief operating officer Kamesh Goyal. However, a south-based private general insurance company is denying cover to its clients.