Terrorist-attacked hotels may face liability claimsNovember 27th, 2008 - 5:55 pm ICT by IANS
Chennai, Nov 27 (IANS) The Taj Mahal Hotel and The Oberoi Trident, the two hotels attacked by terrorists in Mumbai Wednesday night, could face sizeable damage claims, says the insurance industry.”The Law of Torts covers such damage suits if the claimants can prove that the hotel was negligent in providing security. In India, liability policies exclude risk of terrorism,” said Rahul Aggarwal, chief executive of the New Delhi-based Optima Insurance Brokers, an online insurance company providing cover against terror attacks.
Tort law is the name given to a body of laws that addresses and provides remedies for civil wrongs that do not arise out of contractual duties.
“But it is a matter of time for insurers to come out with a cover for humans as well,” Aggarwal told IANS.
Added G.V. Rao, chairman of the Hyderabad-based GVR Risk Management Associates: “Hotels may escape paying out of their pockets provided they have taken liability policies covering risks of injury, death to their guests and visitors.”
According to him, not many hotels and corporates take a policy to cover themselves against the risk of injuries to or death of visitors to their premises. “It is only the multinational companies (MNC) that take terrorism risk covers,” he said.
“Liability insurance portfolio is clocking around 20 percent growth in India and is mainly driven by private insurers like Tata AIG and the public sector’s New India Assurance,” Rao added.
Both Rao and Aggarwal said there will not be any upward revision in the premium rate for covering terrorism risk as claims under this head is minimal.
At the same time, both foresee more corporates opting for terrorism cover.
In India, the terrorism risk premium pool is mainly managed by the General Insurance Corp (GIC).
Premium collected by the non-life insurers offering terrorism damage risk is transferred to the GIC.
According to Optima’s Aggarwal, the terrorism pool size is around Rs.6 billion, and the claims payout around Rs.500 million annually.
Cholamandalam MS General Insurance managing director S.S. Gopalarathnam said insurers can pass off only the risk of property damage due to terror attacks to the terror pool, but have to take reinsurance cover for covering people.
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