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The Hindu
21-05-2025
- Business
- The Hindu
Spurt in premiums for war, political violence cover post Pahalgam attack
Following the terrorist attack at Pahalgam in April and the subsequent ceasefire earlier this month, insurance premiums for war and political violence cover available for Indian companies have risen 'significantly,' according to insurance brokers. Though Indian insurers are not offering any property insurance policies for war and conflicts to Indian corporates, policies covering war and political violence are being made available from international reinsurers which had been issued with stricter limits and conditions. Deepak Madan, Head Commercial Lines, Large Account Practices at Prudent Insurance Brokers said, 'Property insurance policies for war and conflict-related situations are typically excluded from insurance cover so there was no impact at all in premium. And thus geopolitical tensions usually do not influence premium rates.' 'But several companies had purchased war and political violence coverage which is a reinsurance-backed cover, available primarily through international markets. The availability and terms of coverage also vary according to the property's location, particularly in high-exposure areas such as Jammu and Kashmir and other border regions,' Mr. Madan said. Hari Radhakrishnan from Insurance Brokers Association of India (IBAI) said since the geopolitical risk had gone up considerably due to various conflicts such as Ukraine, Gaza, Iran and wider Persian Gulf, and Indo-Pak., there had been a downstream impact on insurance and reinsurance markets. 'Since these conflicts can affect oil prices or commodity prices, there can be impact on underwriting and claims in the form of increased costs, increased restoration periods, logistical challenges. Insurers and reinsurers have to factor these into their operating considerations,' he said. He said since the Indo-Pak. conflict is new and still developing even though there is a pause in active hostilities or live action, the impact might be less visible in the immediate term but could be more visible on a longer-term basis. On the impact on the supply chain due to disruptions caused by geopolitical developments, he said, 'When there are supply chain disruptions, certain insurance products such as trade credit insurance, contingent business interruption covers [coverage for suppliers and customers premises] , see a demand spike which is also being witnessed.'
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Business Standard
12-05-2025
- Business
- Business Standard
Indo-Pak tensions trigger rise in war insurance cover enquiries from firms
The heightened tension between India and Pakistan in recent weeks has prompted an increase in enquiries regarding 'war cover' from Indian companies and individuals alike, said industry insiders. That said, insurance brokers pointed out that 'war' is typically excluded from insurance coverage, except in the case of marine and aviation policies. According to insurance experts, commercial lines, including property, fire and other segments, do not cover 'war', as war on land is historically a standard exclusion. However, 'war cover' may be bought under marine hull and cargo, and aviation segments. The geopolitical tensions between the two countries have led customers to enquire more about war cover for infrastructure. Insurers believe that if war is covered under commercial lines, it would trigger higher claims for insurance companies, resulting in losses. They also say such events are difficult to predict, making modelling challenging for insurers. 'Post the India-Pakistan tensions, there have been a few inquiries from our clients on war cover. Unfortunately, there has been no solution. Globally, war is a standard exclusion in other policies – property, liability, etc. So if damage occurs due to war-like situations, it will not be covered. Insuring critical infrastructure involves huge sums, and if damaged, can severely affect an insurer's balance sheet. Hence, these are intentionally excluded,' said Rushik Patel, Associate Director – Liability, Edme Insurance Brokers. As policyholders' queries on war cover increase, insurance companies are also looking to offer alternative solutions, including protection against political violence or standalone terrorism cover. Political violence provides cover for war-like situations, and in the current case, war was not declared. It also provides cover for sabotage and terrorism. There is also standalone terrorism cover. If policyholders want insurance beyond these, they will have to approach the international market. 'There has been significant anxiety in recent days, and that has led to multiple enquiries. Clients want to assess whether the current war-like situations are covered under their existing policies. If not, they're seeking to understand what alternative solutions are available. Corporates are looking at alternative solutions including political violence cover or standalone terrorism cover,' said Deepak Madan, Head – Commercial Lines, Large Account Practices at Prudent Insurance Brokers.
