Two years after 9/11, the Indian sub-continent has not yet fully woken up to the potential danger that looms large. Internationally, the number of terrorist attacks have multiplied three to four-fold in the last two years.
India has suffered a series of attacks since then -- the latest on August 25 in the heart of Mumbai. Yet, India Inc continues with its slumber.
The first perceptible change is that old relationships have fallen by the way, as insurance companies look for the path of least risk. "Due to a limited reinsurance capacity, and strict accounting norms after the Enron debacle, the focus today is on capital and the return on capital," said a senior reinsurance industry official.
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While some reinsurers do still value old relationships, they also need to see how these relationships will create returns in the long run, he added.
Since September 11, insurance companies have at a drop of a hat hiked premium charges, said Dinyar M Jivaasha, Essar Group head and vice president (corporate risk and insurance management).
He cited the example of how the shipping industry has seen many new ports falling under "sensitive zones" which meant ships plying to these ports had to pay an additional premium.
While some insurance companies point out that many corporate houses are adequately covered, the coverage is limited under the domestic terrorist pool to Rs 200 crore (Rs 2 billion). A large-scale attack -- of the likes of the World Trade Centre -- will hardly be adequately covered.
"Many large corporates are not willing to take more cover, even as coverage up to Rs 500 crore (Rs 5 billion) is available on individual risk basis with the National Reinsurer," said a senior insurance official.
The domestic terrorist pool has collected a mere Rs 400-450 crore (Rs 4-4.5 billion). Claims totalling a measly Rs 9 crore (Rs 90 million) were settled last year. This year, in the first four months, claims of about Rs 11 crore (Rs 110 million) have been settled. The low claim ratio further exemplifies the lack of awareness among the general public, which faces the brunt of such attacks.
Security is usually beefed up after an attack, but taking additional insurance coverage is not seen important, said a senior official at New India Assurance Company.
Corporates do not seem to feel the panic as there have been no major attacks on individual companies on Indian soil, said a senior reinsurance consultant. Refuting the argument, Jivaasha said terrorist cover is difficult to procure, restrictive, and under limited to Rs 200 crore. At the same time, he added, that the cover is not affordable.
Increasingly it is seen that terrorists are targeting Mumbai, the commercial capital, but little is being done by the government to support the corporate world in terms of economic loss, said Jivaasha. "Do we need a second WTC before adequate coverage is taken?" he questioned, as not all corporate houses have opted for terrorist cover.
Insurance companies equally need to get into the fray and educate the corporates on the seriousness of the situation so that the terrorist pool can be expanded and afford greater coverage, said Jivaasha.
"Corporates are taking large covers, but it is the public that is getting hit," said a senior reinsurance official. He has mooted the idea of a terrorist pool that the government could set up for covering the common man against terrorist attacks.
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