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Bajaj Allianz named lead insurer for RTPS 4th unit

C. Shivkumar

With this latest award, BAGICL has revised its premium income target for the current financial year. It has now raised its target to Rs 300 crore, up by Rs 100 crore.

BANGALORE, July 8

BAJAJ Allianz General Insurance Company Ltd (BAGICL) has again bagged the lead insurer's role for the fourth unit of the Raichur Thermal Power Station (RTPS).

Industry sources said that BAGICL was given a 51 per cent share in the business. The public sector Oriental Insurance Company Ltd has a 25 per cent share. The remaining 24 per cent has been allotted to two other private sector players, Reliance General Insurance Company Ltd and IFFCO-Tokio General Insurance Company Ltd.

As in the other five units, the Karnataka Power Corporation (KPCL), which operates RTPS, had opted for the competitive bidding route. Although New India Assurance Company Ltd was the lowest bidder the quotes were not acceptable to KPCL.

Accordingly, the insurance cover was awarded to BAGICL and Oriental since their bids were in `technical conformity' with guidelines, the sources said.

This unit with a rated capacity of 210 MW has been valued at Rs 541 crore on a reinstatement basis, which implies that the claims settlement would be made on a replacement cost basis. Consequently, the premium for Unit IV at Rs 1.01 crore has escalated by at least 40 per cent over last year. The rise in premiums has also been due to the hardening of the international reinsurance markets.

In the reinsurance markets, cost of risk cover has gone up to at least one per cent of sum insured. Besides, for new risks re-insurers are not prepared to provide any cover and even if this cover is available, the premiums are as high as 1.5 per cent of the sum insured.

Consequently, corporates are restricting the scope of insurance cover just to property and some liabilities. Terrorism risk is being kept out currently. Inclusion of this risk would completely alter the maximum loss ratio leading to escalation in the premiums.

With the coverage for Unit IV, insurance coverage for all the six units has now been fully concluded.

With this latest award, BAGICL has revised its premium income target for the current financial year. It has now raised its target to Rs 300 crore, up by Rs 100 crore. The southern region is expected to provide the maximum premium collection, particularly from project covers alone, which include, both property and liability risks.

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