Business Daily from THE HINDU group of publications
Friday, Oct 13, 2006

Cross Currency

Group Sites

Money & Banking - General Insurance
Info-Tech - Insurance
IFFCO-Tokio to cover risks of infotech sector

Our Bureau

Reinsurance support from Hiscox Plc of UK

Giving cover
The product being offered is an errors and omissions risk cover.
Premiums on the product will not be uniform; tariffs are likely to be client specific.

Bangalore , Oct. 12

IFFCO-TOKIO General Insurance Company Ltd (ITGICL) has entered into treaty arrangements with specialist underwriter Hiscox Plc of United Kingdom for providing risk cover to the information technology and IT enabled services sectors in the country.

Speaking to reporters on the tie-up for providing errors and omissions cover to the IT sector, The ITGICL Managing director and Chief Executive officer, Mr Ajit Narain, said that the arrangement would lead to Hiscox providing reinsurance support of a maximum liability of up to $30 million. Hiscox is one of the world's leading technology underwriters specialising in technology liability.

Targeting IT

"Ceding of risks up to this limit will be automatic," Mr Narain said. However, beyond this amount, it would be done on a facultative basis, he added. Facultative basis implies that reinsurer has the right to accept or reject covers beyond this limit. IFFCO-Tokio is joint venture between IFFCO and the Tokio Marine and Fire Insurance Company of Japan.

The product being offered is an errors and omissions risk cover, targeted exclusively at the software sector. This product covers litigation risks of vendors. As Indian technology companies get greater global exposure, they also face litigation from customers, Mr Narain said. This cover is intended to mitigate these risks. Premiums on the product would not be uniform. Tariffs would be client specific, he added.

Referring to the company's progress, he said, till September, ITGICL's gross premium accretions are Rs 655 crore, up 53 per cent over the corresponding period of the last financial year. Average claims are about 65 per cent, Mr Narain said.

Solvency pressures

But, he said, there are no solvency pressures. The current capital is more than enough to support the solvency of the company, he explained. ITGICL is currently capitalised at Rs 220 crore. "The partners are prepared to bring in more capital if required," he said.

Referring to the impact of tariff deregulation, he disagreed that premiums would drop due to intense competition. Instead, he said, some sectors that are loss making would actually see an increase in tariffs.

It is in the low loss sectors that some correction in pricing is expected, he added. He said that they are fully prepared for the free pricing regime, since they have already built up five-year database.

More Stories on : General Insurance | Insurance | IT-enabled Services

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Tarapore Report II — Little light on deficit, gold

Rupee gains against dollar
SunTec banking tool
SBI exit policy for officers to close
Insurance Bill to lift FDI cap to 49 pc
Max NY launches Life Invest
IFFCO-Tokio to cover risks of infotech sector
IFC to buy HDFC Bank bonds
Karnataka Bank opens new branch
IFC picks up stake in Suguna Poultry for $11 m
RBI sets cut-off rate
Bond prices rise 16 paise
HDFC Bank in tie-up with AP postal dept
Call rates down at 6.35- 6.45 pc
Andhra Bank hikes deposit rates
Mandvi Co-op to merge with Saraswat Bank
PNB sees improved net profit in Q2

The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription
Group Sites: The Hindu | The Hindu ePaper | Business Line | Business Line ePaper | Sportstar | Frontline | The Hindu eBooks | The Hindu Images | Home |

Copyright 2006, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line