FIRE CIRCULARS - 2002
TARIFF ADVISORY COMMITTEE
HEAD OFFICE : MUMBAI
Sub: Riot, Strike, Malicious and Terrorism Damage (RSMTD) Cover under All India Fire Tariff.
Effective from 1-4-2002 the following revised provisions will be applicable :
1) Terrorism cover will be a separate cover which can be granted only in conjunction with Riot, Strike and Malicious Damage cover (RSMD). Terrorism cover will not be given in isolation without RSMD cover.
2) The Riot, Strike, Malicious and Terrorism Damage cover under the Standard Fire and Special Perils Policy (Material Damage), Section II of the All India Fire Tariff will be renamed as Riot, Strike, Malicious Damage cover and will exclude terrorism damage and the relevant provision will stand amended to read as under:
Riot, Strike and Malicious Damage
Loss of or visible physical damage or destruction by external violent means directly caused to the property insured but excluding those caused by
a. total or partial cessation of work or the retardation or interruption or cessation of any process or operations or omissions of any kind.
b. Permanent or temporary dispossession resulting from confiscation, commandeering, requisition or destruction by order of the Government or any lawfully constituted Authority.
c. Permanent or temporary dispossession of any building or plant or unit of machinery resulting from the unlawful occupation by any person of such building or plant or unit or machinery or prevention of access to the same.
d. Burglary, housebreaking, theft, larceny or any such attempt or any omission of any kind of any person (whether or not such act is committed in the course of a disturbance of public peace) in any malicious act.
If the Company alleges that the loss/damage is not caused by any malicious act, the burden of proving the contrary shall be upon the insured.
Terrorism Damage Exclusion Warranty :
Notwithstanding any provision to the contrary within this insurance it is agreed that this insurance excludes loss, damage cost or expense of whatsoever nature directly or indirectly caused by, resulting from or in connection with any act of terrorism regardless of any other cause or event contributing concurrently or in any other sequence to the loss.
For the purpose of this endorsement an act of terrorism means an act, including but not limited to the use of force or violence and / or the threat thereof, of any person or group(s) of persons whether acting alone or on behalf of or in connection with any organisation(s) or government(s), committed for political, religious, ideological or similar purpose including the intention to influence any government and/or to put the public, or any section of the public in fear.
The warranty also excludes loss, damage, cost or expenses of whatsoever nature directly or indirectly caused by, resulting from or in connection with any action taken in controlling, preventing, suppressing or in any way relating to action taken in respect of any act of terrorism.
If the Company alleges that by reason of this exclusion, any loss, damage, cost or expenses is not covered by this insurance the burden of proving the contrary shall be upon the insured.
In the event any portion of this endorsement is found to be invalid or unenforceable, the remainder shall remain in full force and effect.
3) Mid-term Cover : No mid-term cover shall be granted for RSMD and Terrorism. The present provision for mid term cover as provided under Rule 4, of General Rules and Regulations - Section I of the All India Fire Tariff in so far as it relates to RSMTD perils shall stand deleted.
4) Rule 1(e) of the General Rules and Regulations of the All India Fire Tariff will stand amended to read as under:
" It is permissible to exclude Storm, Tempest, Flood and Inundation group of perils (hereinafter referred to as STFI) and/or Riot, Strike and Malicious Damage perils (hereinafter referred to as RSMD) at inception of the Policy by deleting the relevant perils from the policy.
The deletion shall apply for the entire property in one complex/compound/location covering the entire interest of the insured under one or more policy(ies) without any option for selection. Reduction in premium rates for such deletion(s) may be allowed as shown under the relevant sections of the tariff. When these perils are deleted from the scope of the policy, the general exclusions shall include these perils."
5) Reduction in premium rates for exercising the option to delete STFI/RSMTD perils at the inception of the policies provided for under various sections of the tariff in so far as they relate to RSMTD perils, will be applicable only in respect of RSMD perils. There will be no reduction of premium for exclusion of Terrorism risk.
6) Rates for Terrorism Cover :
Premium will be charged separately for covering terrorism risk at the following rates.
| Industrial Risks (i.e. Risks rateable under Section IV,V,VI and VII of All India Fire Tariff and under Petrochemical Tariff) | Re.0.50 per mille |
| Non-industrial Risks (Risks rateable under Section III of All India Fire Tariff) | Re.0.30 per mille |
| The above
rates will be charged separately on the total sum insured for Material
Damage and Loss of Profit.
7) Limit of Insurance for terrorism : The maximum loss limit under Terrorism cover shall be Rs.200 crores for any one risk (MD+LOP). For this purpose one risk shall be defined as one compound or one location. In respect of several insurances within the same compound / location with all Indian insurers, the maximum aggregate loss (MD+LOP) payable per compound / location shall be Rs.200 crores. If the actual aggregate loss suffered at one compound / location is more than Rs.200 crores, the amounts payable under individual policies shall be reduced on pro rata basis. Premium rates shall apply on Total Sum Insured as detailed under: |
| Total Sum Insured (MD+LOP) (Rs) (TSI) | Premium on TSI | Overall Liability (MD+LOP) Cap |
| Upto 200 crores | Full rate | 200 crores |
| Over 200 crs to 250 crs | 97.5 % of full rate | 200 crores |
| Over 250 crs to 500 crs | 95 % of full rate | 200 crores |
| Over 500 crs to 1000 crs | 90 % of full rate | 200 crores |
| Over 1000 crs to 1500 crs | 85 % of full rate | 200 crores |
| Over 1500 crs to 2000 crs | 80 % of full rate | 200 crores |
| Over 2000 crs | 75 % of full rate | 200 crores |
For loss liability limits in excess of Rs. 200 crores, insurers can obtain rates from reinsurers and handle its reinsurance, subject to their charging premium as per item 6 for the coverage up to Rs.200 crores.
8) Deductibles : Every claim under terrorism cover will be subject to a deductible as under:
Industrial Risks - 0.5 % of TSI subject to a minimum of Rs. 1 lakh
(i.e. Risks rateable under Section IV,V,VI and VII of All India Fire Tariff and under Petrochemical Tariff)
Non-industrial Risks - 0.5 % of TSI subject to a minimum of Rs. 25,000/-
(Risks rateable under Section III of All India Fire Tariff))
9) Terrorism Damage Cover Endorsement : When the insured opts for Terrorism Damage cover by paying additional premium as provided under item no (6) above, cover will be granted by attaching the following endorsement:
"It is hereby declared and agreed that in consideration of payment of additional premium of Rs._______, the Terrorism Damage Exclusion Warranty of the Riot, Strike, Malicious Damage provision forming part of the within mentioned policy stands deleted. The expression/s "terrorism and/or act of terrorism" shall have the same meaning/s as contained in Terrorism Damage Exclusion Warranty.
This endorsement does not cover loss of or damage caused by
A)
I. total or partial cessation of work or the retardation or interruption or cessation of any process or operations or omissions of any kind.
II. Permanent or temporary dispossession resulting from confiscation, commandeering, requisition or destruction by order of the Government or any lawfully constituted Authority.
III. Permanent or temporary dispossession of any building or plant or unit of machinery resulting from the unlawful occupation by any person of such building or plant or unit or machinery or prevention of access to the same.
IV. Burglary, housebreaking, theft, larceny or any such attempt or any omission of any kind of any person (whether or not such act is committed in the course of a disturbance of public peace) in any action taken in respect of an act of terrorism.
B)
loss or damage, cost or expenses of whatsoever nature directly or indirectly caused by, resulting from or in connection with any action taken in controlling , preventing , suppressing or in any way relating to action taken in respect of any act of terrorism.
If the Company alleges that by reason of this exclusion, any loss, damage, cost or expenses is not covered by this insurance the burden of proving the contrary shall be upon the insured.
The limit of coverage under this endorsement shall not exceed Rs. _______ (insert here the overall liability limit for Material Damage + Loss of Profit). In respect of several insurances within the same compound / location with all the Indian insurers, the maximum aggregate loss (MD+LOP) payable per compound /location shall be Rs.200 crores. If the actual aggregate loss suffered at one compound / location is more than Rs.200 crores, the amounts payable under individual policies shall be reduced on pro rata basis.
The coverage under this endorsement is subject to an excess of Re. 0.5% of the total sum insured subject to a minimum of Rs. ______ (insert Rs. 25000 or Rs. 1 lakh as applicable) for each and every claim in respect of both material damage and loss of profits combined."
10) Treatment of surcharge applied from 1-10-2001 :
10% surcharge on account of terrorism was applicable w.e.f 1-10-2001. All such insurance will be cancelled on pro rata basis as on 31-3-2002 and fresh insurance will be effected w.e.f 1-4-2002 for the unexpired period with the revised rates for terrorism risks on pro-rata basis.
In the case of insurance of risks where the insurers may have already concluded reinsurance arrangements and such cancellation is not required by reinsurance arrangements, insurers will have the option to continue the present insurance (where 10% surcharge has been collected ) till expiry.
Insurers are advised to inform their operating offices suitably.
Secretary
TARIFF ADVISORY COMMITTEE
HEAD OFFICE : MUMBAI
FT/ 2 /2002
Date : 13-3-2002
Sub : Coverage
for Terrorism Loss/Damageunder Industrial All Risks Insurance Tariff
1. Effective from 1st April, 2002 the following Terrorism Damage Exclusion
Warranty shall be incorporated as item 6 under Excluded Causes of section I
(Material Damage) in all IAR policies:
Terrorism Damage Exclusion Warranty
Notwithstanding any provision to the contrary within this insurance, it is
agreed that this insurance excludes loss, damage cost or expense of whatsoever
nature directly or indirectly caused by, resulting from or in connection with
any act of terrorism regardless of any other cause or event contributing
concurrently or in any other sequence to the loss.
For the purpose of this endorsement an act of terrorism means an act,
including but not limited to the use of force or violence and or the threat
thereof, of any person or group(s) of persons whether acting alone or on behalf
of or in connection with any organisation(s) or government(s) committed for
political, religious, ideological or similar purpose including the intention to
influence any government and/or to put the public, or any section of the public
in fear.
The warranty also excludes loss, damage, cost or expenses of whatsoever
nature directly or indirectly caused by, resulting from or in connection with
any action taken in controlling, preventing, suppressing or in any way relating
to action taken in respect of any act of terrorism.
If the Company alleges that by reason of this exclusion, any loss, damage,
cost or expenses is not covered by this insurance the burden of proving the
contrary shall be upon the insured.
In the event any portion of this endorsement is found to be invalid or
unenforceable, the remainder shall remain in full force and effect.
2. Deletion of Terrorism Damage Exclusion Warranty. Terrorism Damage
Exclusion Warranty can be deleted by charging extra premium @ Re. 0.50%o on the
Total Sum Insured of Section I and Section II of the Industrial All Risks
Insurance Policy. However the coverage shall be subject to maximum limits as
provided in item 4 below and also other terms/conditions mentioned elsewhere in
this Circular.
3. Mid-term Cover : No mid-term cover shall be granted for terrorism
risk.
4. Limit of Insurance for Terrorism Cover :
The maximum loss limit under Terrorism cover shall be Rs. 200 crores for any
one risk (MD+LOP). For this purpose, one risk shall be defined as one compound
or one location. In respect of several insurances within the same compound /
location with all Indian insurers, the maximum aggregate loss payable per
compound /location shall be Rs. 200 crores. If the actual aggregate loss
suffered at one compound / location by all Indian insurers is more than Rs. 200
crores, the amounts payable under individual policies shall be reduced in
the same proportion as Rs. 200 crores to the aggregate of all losses at that
compound / location.
| Total Sum Insured (MD+LOP) (Rs) (TSI) | Premium on TSI | Overall Liability (MD+LOP) Cap |
| Upto 200 crores | Full rate | 200 crores |
| Over 200 crs. to 250 crs. | 97.5% of full rate | '' |
| Over 250 crs. To 500 crs. | 95% '' | '' |
| Over 500 crs. To 1000 crs. | 90% '' | '' |
| Over 1000 crs. To 1500 crs. | 85% '' | '' |
| Over 1500 crs. To 2000 crs. | 80% '' | '' |
| Over 2000 crs. | 75% '' | '' |
For loss liability limits in excess of Rs. 200 crores, insurers can obtain rates from reinsurers and handle its reinsurance, subject to their charging premium as per item 2 for the coverage up to Rs.200 crores .
5.Deductible for Terrorism Damage Claims: Every claim under terrorism cover will be subject to deductible as under :
0.5% of TSI subject to a minimum of Rs. One lakh.
6.Documentation.
Where Terrorism Damage Exclusion warranty is deleted by charging additional premium as in item 2 above, the following endorsement shall be attached to the policy :
"It is hereby declared and agreed that in consideration of payment of additional premium of Rs._______, the Terrorism Damage Exclusion Warranty of the within mentioned policy stands deleted. The expression/s "terrorism and/or act of terrorism" shall have the same meaning/s as contained in Terrorism Damage Exclusion Warranty.
This endorsement does not cover loss of or damage caused by
A)
I. total or partial cessation of work or the retardation or interruption or cessation of any process or operations or omissions of any kind.
II. Permanent or temporary dispossession resulting from confiscation, commandeering, requisition or destruction by order of the Government or any lawfully constituted Authority.
III. Permanent or temporary dispossession of any building or plant or unit of machinery resulting from the unlawful occupation by any person of such building or plant or unit or machinery or prevention of access to the same.
IV. Burglary, housebreaking, theft, larceny or any such attempt or any omission of any kind of any person (whether or not such act is committed in the course of a disturbance of public peace) in any action taken in respect of an act of terrorism.
B)
loss or damage, cost or expenses of whatsoever nature directly or indirectly caused by, resulting from or in connection with any action taken in controlling , preventing , suppressing or in any way relating to action taken in respect of any act of terrorism.
If the Company alleges that by reason of this exclusion, any loss, damage, cost or expenses is not covered by this insurance the burden of proving the contrary shall be upon the insured.
In respect of several insurances within the same compound / location by all Indian insurers, the maximum aggregate loss payable per compound / location shall be Rs. 200 crores. If the actual aggregate loss suffered at one compound / location by all Indian insurers is more than Rs. 200 crores, the amounts payable under individual policies shall be reduced in the proportion that Rs. 200 crores bears to the aggregate of all losses payable at that compound / compound.
The limit of coverage under this endorsement shall not exceed Rs. _______ (insert here the overall liability limit for Material Damage + Loss of Profit).
The coverage under this endorsement is subject to an excess of 0.5% of the total sum insured subject to a minimum of Rs. One lakh for each and every claim in respect of both material damage and loss of profits combined."
7. Treatment of surcharge of 10% applicable from 1-10-2001 :
10% surcharge on account of terrorism was applicable w.e.f 1-10-2001. All such insurance will be cancelled on pro rata basis as on 31-3-2002 and fresh insurance will be effected w.e.f 1-4-2002 for the unexpired period with the revised rates for terrorism risk on pro-rata basis.
In the case of insurance of risks where the insurers may have already concluded reinsurance arrangements and such cancellation is not required by reinsurance arrangements, insurers will have the option to continue the present insurance (where 10% surcharge has been collected ) till expiry.
Insurers are advised to inform their operating offices in this regard.
Secretary
TARIFF ADVISORY COMMITTEE
HEAD OFFICE : MUMBAI
Re: Insurance of Terrorism Risk under Fire and Engineering Insurance policies w.e.f 1-4-2002
This refers to circular nos. D-3/IRDA/3/2002 dated March 22, 2002 and D-4/IRDA/3/2002 dated March 28, 2002 issued by the Insurance Regulatory and Development Authority. Based on representations from insurers and the General Insurance Corporation of India (Manager for Terrorism Pool) the Authority has approved revision in the rates for coverage of terrorism risks and the revised rates are as under :
| Total Sum Insured (MD+LOP) . | Premium on Total
Sum Insured (TSI)
|
Overall (MD+LOP) liability cap per location/compound |
| TSI upto Rs.200 crores | Full rate of Re. 0.5%o (for industrial risks) or Re.0.3%o (for non-industrial risks) | Rs.200 crores |
| TSI exceeding Rs.200 crores but not exceeding Rs.2000 crores | a) Full rate of Rs.0.5%o (for
industrial risks) or Re.0.3%o (for non-industrial risks) on the first
Rs.200 crores and
b) Re.0.375%o (for industrial risks) or Rs.0.225%o (for non-industrial risks) on the balance TSI. |
Rs.200 crores |
| TSI exceding Rs.2000 crores | a) Full rate of Re.0.5%o (for
industrial risks) or Re.0.3%o (for non-industrial risks) on the first
Rs.200 crores and
b) Re.0.375%o (for industrial risks) or Re.0.225%o (for non-industrial risks) on the next Rs.1800 crores and c) Re.0.3%o (for industrial risks) or Re.0.18% o (for non- industrial risks) on the balance TSI in excess of Rs.2000 crores. |
Rs.200 crores |
Secretary
TARIFF ADVISORY COMMITTEE
HEAD OFFICE: ADOR HOUSE
1ST FLOOR, 6,K. DUBASH MARG,
MUMBAI - 400 023.
To: 1. All insurers including State Govt. Insurance Depts., carrying general
insurance business in India.
2. IRDA, New Delhi
3. General Insurance Corporation of India
4. All Regional and Divisional Offices of Tariff Advisory Committee
5. Audit Department, Government of India
Mumbai/Calcutta/Delhi/Chennai.
____________________________________________________________
Accreditation of Professionals/Professional agencies for certifying FEA Installations
Insurer's attention is invited to the Item 17(b) of General Rules & Regulations, Section 1 of All India Fire Tariff effective from 31-3-2001. The Item 17(b) is reproduced below :
"System is erected and tested as per the relevant Regulations of the TAC and a certificate from LPA or TAC accredited Professional(s)/Professional agency(ies), confirming the efficacy of the system and its full compliance with the Committee's rules, is submitted by the Insured.
Note : Professional(s)/Professional agency(ies) designing and/or installing the system themeselves shall get the system certified by third parties."
Pending accreditation of Professionals/Professional Agencies by TAC, Chairman IRDA/TAC, has approved that insurance companies can select Profesionals/Prefessional Agencies satisfying the following norms, to certify FEA installation :
For Professionals :
a. Should be Graduate Engineer with 5 years experience in the Fire Protection field or Diploma Engineer with 10 years related experience.
and
b. Should have handled atleast 3 projects for which proposals submitted were approved and full discounts granted for the Fire Protection systems by TAC or Insurance Companies.
Information in this connection should be provided to the Insurance Company in the following format :
LIST OF PROJECTS HANDLED
| Sr.No | Risk Name | Type of
Fire
Protection provided |
Year of execution | Quantum of discount sanctioned by the Competent Authority | Reference of letter(s) advising such discount |
Note : Relevant documents (work order/job order/completion certificate) to be attached for verification by the insurance company.
c. Expertise should be indicated in specific areas of Fire Protection (Hydrant/Sprinkler/Water spray system etc.)
For Professional Agencies :
a. Should have one or more professionals with requirements of 3 a), b) and c) above.
b. The professional agency should be financially sound. Audited financial statements to be submitted for verification by the insurance company.
General : (Applicable to both Professionals/Professional agencies)
1. Selection of professionals/professional agency to be done only at the corporate office of the insurance company.
2. Professionals/Professional agencies will not certify any installation in which they are involved as suppliers, erectors, contractors or consultants.
Insurers may be guided by the above mentioned instructions.
Secretary
TARIFF ADVISORY COMMITTEE
HEAD OFFICE: ADOR HOUSE
1ST FLOOR, 6,K. DUBASH MARG,
MUMBAI - 400 023.
____________________________________________________________
To: 1. All insurers including State Govt. Insurance Depts., carrying general
insurance business in India.
2. IRDA, New Delhi
3. General Insurance Corporation of India
4. All Regional and Divisional Offices of Tariff Advisory Committee
5. Audit Department, Government of India
Mumbai/Calcutta/Delhi/Chennai.
____________________________________________________________
Re : Gujarat Riots
We enclose detailed clarifications dated June 24, 2002 received from Chairman, IRDA.
Insurers may be guided accordingly.
SECRETARY
INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY
June 24, 2002
References have been received in this office on the status of claims that arise on looting connected with the riots in Gujarat. This matter was examined by the headquarters of Tariff Advisory Committee and on the basis of an interpretation made by the Committee, a view was expressed that claims to looting stand excluded in terms of fire policy currently in force under Item No. V of Section II of the Tariff. This exception built under Item 5 is found in clause(d) according to which claims relating to burglary, house breaking, theft, arson etc. committed in the course of a disturbance or public peace, if any, in malicious act would stand excluded from payment.
New India, however, has clarified to its offices that such a claim would be payable. Support for this has been sought from the terminology of the old tariff as well as the current practices of the market. New India apparently also believes in adopting precedents where in similar situations in the past in 1984 Delhi riots, 1992 Bombay riots etc., claims have been paid by the nationalised companies. According to New India, the new tariff has not changed materially the old one and the new tariff has only brought together exceptions etc. found in different places.
I have also received a representation from Mehta Padamsay of Bombay where the conditions of the policy had been examined by the firm and found to be supportive of payment. Alongwith the letter, extracts from well known books on fire insurance have also been attached which support the claim to payment.
Riot, strike, malicious damage and terrorism cover is an integral part of the fire policy. Only recently the terrorism part has been de-linked and separately priced. In other words, we still have the riot, strike and malicious damage claims covered by a fire policy. It is true that section II clause V of the policy documents covers the riots except the four situations which have been mentioned therein. Burglary, house breaking etc. occurring as part of a malicious act where such an act was committed in the course of a disturbance or public peace is listed as an exclusion. The exclusion does not specifically mention looting. However, to my mind, this does not make any material difference because the term can be considered to be similar to those used in the clause.
The relevant clause that one should look to would be clause II under general exclusions of the fire policy. This clearly supports the view that any claim under a RSMD cover will not be excluded under the general exceptions provision.
The question whether looting is a part of the riot cover is not the issue now. The question to be considered confines itself to considering whether looting arising out of or following a riot is payable in terms of a fire policy. It is not disputed that the looting has followed the riots in these cases. The issue would be whether we should not take into account the proximate cause for the looting. If loss arises on account of looting in a riot where the riot peril itself is an insured peril, there should not be any difficulty in meeting the claim under the policy. As things stands at present, the tariff as well as the precedents that the industry has followed so far together with the authoritative literature on the subject support the payment for claim under the riot clause provided all other conditions of the policy have been satisfied.
Secretary, TAC may issue the clarification to all insurers on the above lines.
(N. RANGACHARY)
CHAIRMAN
TARIFF ADVISORY COMMITTEE
HEAD OFFICE : MUMBAI
Engg/Gen-4/24/16/17/2002-14 11th March, 2002
Reg: Cover for terrorism under Engineering Policies
Effective from 1st April 2002
Erection all Risks Insurance (EAR/MCE/SCE)
Contractors all Risks Insurance (CAR)
Contractor's Plant and Equipment Insurance (CPM)
Electronic Equipment Insurance (EEI)
will be subject to the following revised provisions
1. Terrorism Damage Exclusion warranty as per the following wordings shall be made applicable to all the above-mentioned types of policies.
Terrorism Damage Exclusion Warranty:
"Notwithstanding any provision to the contrary within this insurance it is agreed that this insurance excludes loss, damage cost or expense of whatsoever nature directly or indirectly caused by, resulting from or in connection with any act of terrorism regardless of any other cause or event contributing concurrently or in any other sequence to the loss.
For the purpose of this warranty an act of terrorism means an act, including but not limited to the use of force or violence and /or the threat thereof, of any person or group(s) of persons whether acting alone or on behalf of or in connection with any organisation(s) or governments(s) committed for political, religious, ideological or similar purpose including the intention to influence any government and/or to put the public, or any section of the public in fear.
The warranty also excludes loss, damage, cost or expenses of whatsoever nature directly or indirectly caused by, resulting from or in connection with any action taken in controlling, preventing, suppressing or to in any way relating to action taken in respect of an act of terrorism.
If the Company alleges that by reason of this exclusion, any loss, damage, cost or expenses is not covered by this insurance the burden of proving the contrary shall be upon the Assured."
In the event any portion of this endorsement is found to be invalid or unenforceable, the remainder shall remain in full force and effect.
2. Terrorism Damage Exclusion Warranty shall be incorporated under relevant sections of EAR, CAR, CPM and EEI policies as under:
EEI policy —as 'exclusion-i'
3. Coverage for Terrorism Damage:
Terrorism Damage Exclusion Warranty can be deleted by companies by charging additional premium as per the following schedule.
i)0.05% for the annual Engineering policies i.e EEI & CPM policies
ii)0.5%0 per annum for the EAR & CAR policies to be charged on pro-rata basis for policy period in excess of 12 months. For shorter policies i.e for a period up-to 6 months the rate shall be 50% of annual rate and that for a period exceeding 6 months and up-to 12 months the rate shall be the full annual rate. The coverage in respect of terrorism will be subject to limits as in item 5 below.
4. Mid-term cover. No mid-term cover shall be granted for terrorism risk.
5.Limits of Insurance
The maximum loss limit under Terrorism cover shall be Rs.200 crores for any one risk. For this purpose one risk shall be defined as one compound or one location. In respect of several insurances within the same compound /location with all Indian insurers, the maximum aggregate loss payable by all Indian insurers per compound/location shall be Rs.200 crores. If the actual aggregate loss suffered at one location is more than Rs.200 crores, the amounts payable under individual policies shall be reduced in the same proportion as Rs. 200 crores bears to the aggregate of all losses in that location.
Premium rates shall apply on Total Sum Insured as detailed under:
| Total Sum Insured | Premium on TSI | Overall liability
(MD+LOP) Cap |
| Upto 200 crs | Full rate | 200crs |
| Over 200crs to 250crs | 97.5% of Full rate | 200crs |
| Over 250crs to 500crs | 95% of Full rate | 200crs |
| Over 500crs to 1000crs | 90% of Full rate | 200crs |
| Over 1000crs to 1500crs | 85% of Full rate | 200crs |
| Over 2000crs | 75% of Full rate | 200crs |
For loss liability limits in excess of Rs. 200 crores, insurers can obtain rates from reinsurers and handle its reinsurance, subject to their charging premium as per item 3 for the coverage up to Rs.200 crores .
6. Deductibles:
Every claim under terrorism cover will be subject to a deductible of 0.50% of TSI and subject to a minimum of Rs. 1 lakh.
7. Deletion of Terrorism Damage Exclusion Warranty:
If the 'Terrorism Damage Exclusion' is deleted by payment of premium as per item 3 above, the policy will be endorsed as per the wordings given below.
It is hereby declared and agreed that in consideration of payment of additional premium of Rs._______, the 'Terrorism Damage Exclusion Warranty attached to and forming part of the within mentioned policy, stands deleted. The expression/s "terrorism and/or act of terrorism" shall have the same meaning/s as contained in Terrorism Damage Exclusion Warranty.
This endorsement does not cover loss of or damage to property caused by
A)
I. total or partial cessation of work or the retardation or interruption or cessation of any process or operations or omissions of any kind.
II. Permanent or temporary dispossession resulting from confiscation, commandeering, requisition or destruction by order of the Government or any lawfully constituted Authority.
III. Permanent or temporary dispossession of any building or plant or unit or machinery resulting from the unlawful occupation by any person of such building or plant or unit or machinery or prevention of access to the same.
IV. Burglary, housebreaking, theft, larceny or any such attempt or any omission of any kind of any person (whether or not such act is committed in the course of a disturbance of public peace) in any action taken in respect of an act of terrorism.
B)
loss or damage, cost or expenses of whatsoever nature directly or indirectly caused by, resulting from or in connection with any action taken in controlling , preventing , suppressing or in any way relating to action taken in respect of any act of terrorism.
If the Company alleges that by reason of this exclusion, any loss, damage, cost or expenses is not covered by this insurance the burden of proving the contrary shall be upon the insured.
The limit of coverage under this endorsement shall not exceed Rs. _______ (insert here the overall liability limit).
In the event of several insurances within the same location with all Indian insurers, the maximum aggregate loss payable per compound/location by all Indian insurers shall be Rs.200 crores. If the actual aggregate loss suffered at one location in respect of all Indian insurers is more than Rs.200 crores, the amounts payable under individual policies shall be reduced in the same proportion as Rs. 200 crores bears to the aggregate of all losses with all Indian insurers in that location.
The coverage under this endorsement is subject to an excess of 0.5% of the total sum insured subject to a minimum of Rs. One lakh for each and every claim in respect of both material damage and loss of profits combined."
8. Treatment of Surcharge applied from 01.10.2001
A 10% surcharge on account of terrorism was applicable w.e.f 1.10.2001. All such insurance will be cancelled on pro-rata basis as on 31.3.2002 and fresh insurance will be effected w.e.f 1.4.2002 for the un-expired period with the revised rates for terrorism risks on pro-rata basis.
In the case of insurance of risks where insurers may have already concluded reinsurance arrangements and such cancellation is not required by reinsurance arrangements, insurers will have the option to continue the present insurance (where 10% surcharge has been collected) till expiry.
Insurers may advise their operating offices suitably.
Secretary
TARIFF ADVISORY COMMITTEE
HEAD OFFICE : MUMBAI
Engg/Gen-4/24/16/17/2002-15
15th
March, 2002
Re: Cover for terrorism under Civil Engineering Completed Risks
(CECR) Policies
Effective from 1-4-2002 the following revised provisions will be applicable
for terrorism cover under CECR policies.
1) Terrorism cover will be a separate cover, which
can be granted only in conjunction with Riot, Strike and Malicious Damage cover
(RSMD). Terrorism cover will not be given in isolation without RSMD cover.
2) The Riot, Strike, Malicious and Terrorism
Damage Clause under the Standard CECR Policy will be renamed as Riot, Strike,
Malicious Damage Clause and will exclude terrorism damage and the relevant
Clause will stand amended to read as under:
Riot, Strike and Malicious Damage Clause
Loss of or visible physical damage or destruction by external violent means
to the property insured directly caused by
a) The act of
any person taking part together with others in any disturbance of the public
peace (whether in connection with a strike or lockout or not) not being an
occurrence mentioned in exclusion 6(a) and (b) of the CECR policy.
b) The action
of any lawfully constituted authority in suppressing or attempting to suppress
any such disturbance or in minimising the consequences of any such disturbance.
c) The
willful act of any striker or locked-out worker done in furtherance of strike or
in resistance to a lock-out resulting in visible physical damage by external
violent means.
d) The action
of any lawfully constituted authority in preventing or attempting to prevent any
such act or in minimising the consequences of any such act.
e) Any
malicious act but excluding any omission of any kind of any person (whether or
not such act is committed in the course of a disturbance of public peace)
provided that the Company shall not be liable for any loss or damage arising out
of or in course of burglary, housebreaking, theft or larceny or any attempt by
any person taking part therein.
This insurance does not cover –
a)
Loss or earnings, loss of delay, loss of market or other consequential or
indirect loss or damage of any kind or description whatsoever.
b)
Loss or damage resulting from total or partial cessation of work or the
retarding or interruption or cessation of any process or operation or omission
of any kind.
C) Loss or damage occasioned by
permanent or temporary dispossession resulting from confiscation, commandeering
or requisition by any lawfully constituted authority.
d) Loss or damage
occasioned by permanent or temporary dispossession of any building or plant or
unit or machinery resulting from the unlawful occupation by any person of such
building or plant or unit or machinery on prevention of access to the same.
If the Company alleges that loss/damage is not caused by any malicious act,
the burden of proving the contrary shall be upon the insured.
Terrorism Damage Exclusion Warranty:
Notwithstanding any provision to the contrary within this insurance it is
agreed that this insurance excludes loss, damage cost or expense of whatsoever
nature directly or indirectly caused by, resulting from or in connection with
any act of terrorism regardless of any other cause or event contributing
concurrently or in any other sequence to the loss.
For the purpose of this endorsement an act of terrorism means an act,
including but not limited to the use of force or violence and / or the threat
thereof, of any person or group(s) of persons whether acting alone or on behalf
of or in connection with any organisation(s) or government(s), committed for
political, religious, ideological or similar purpose including the intention to
influence any government and/or to put the public, or any section of the public
in fear.
The warranty also excludes loss, damage, cost or expenses of whatsoever
nature directly or indirectly caused by, resulting from or in connection with
any action taken in controlling, preventing, suppressing or in any way relating
to action taken in respect of any act of terrorism.
If the Company alleges that by reason of this exclusion, any loss, damage,
cost or expenses is not covered by this insurance the burden of proving the
contrary shall be upon the insured.
In the event any portion of this endorsement is found to be invalid or
unenforceable, the remainder shall remain in full force and effect.
3) Mid-term Cover: No
mid-term cover shall be granted for RSMD and Terrorism.
4) Rate for Terrorism Cover:
Premium will be charged separately for covering terrorism risk at Re.0.50 per
mille.
The above rate will be charged separately on the total sum insured for
Material Damage and Loss of Profit.
5) Limit of Insurance for terrorism:
The maximum loss limit under Terrorism cover shall be Rs.200 crores for any
one risk (MD+LOP). For this purpose one risk shall be defined as one compound or
one location. In respect of several insurances within the same compound /
location with all Indian insurers, the maximum aggregate loss (MD+LOP) payable
per compound / location shall be Rs.200 crores. If the actual aggregate loss
suffered at one compound / location is more than Rs.200 crores, the amounts
payable under individual policies shall be reduced on pro rata basis.
Premium rates shall apply on Total Sum Insured as detailed under:
For loss liability limits in excess of Rs. 200 crores, insurers can obtain
rates from reinsurers and handle its reinsurance, subject to their charging
premium as per item 4 for the coverage up to Rs.200 crores.
6) Deductibles: Every claim under terrorism
cover will be subject to a deductible of 0.5 % of TSI subject to a minimum of
Rs. 1 lakh
7) Terrorism Damage Cover Endorsement: When
the insured opts for Terrorism Damage cover by paying additional premium as
provided under item no (4) above, cover will be granted by attaching the
following endorsement: "It is hereby declared and agreed that in
consideration of payment of additional premium of Rs._______, the Terrorism
Damage Exclusion Warranty of the Riot, Strike, Malicious Damage Clause
forming part of the within mentioned policy stands deleted. The expression/s
"terrorism and/or act of terrorism" shall have the same meaning/s as contained
in Terrorism Damage Exclusion Warranty. This endorsement does not cover
loss of or damage caused by
A) a)
Loss or earnings, loss of delay, loss of market or other consequential or
indirect loss or damage of any kind or description whatsoever. b) Loss or damage
resulting from total or partial cessation of work or the retarding or
interruption or cessation of any process or operation or omission of any kind.
c) Loss or
damage occasioned by permanent or temporary dispossession resulting from
confiscation, commandeering or requisition by any lawfully constituted
authority. d)
Loss or damage occasioned by permanent or temporary dispossession of any
building or plant or unit or machinery resulting from the unlawful occupation by
any person of such building or plant or unit or machinery on prevention of
access to the same. PROVIDED nevertheless that the Company is not relieved under
(c) or (d) above of any liability to the Insured in respect of physical damage
to the property insured occurring before dispossession or during temporary
dispossession.
B) Loss or damage, cost or expenses of whatsoever nature directly or
indirectly caused by, resulting from or in connection with any action taken in
controlling , preventing , suppressing or in any way relating to action taken in
respect of any act of terrorism. If the Company alleges that by reason of this
exclusion, any loss, damage, cost or expenses is not covered by this insurance
the burden of proving the contrary shall be upon the insured. The limit of
coverage under this endorsement shall not exceed Rs. _______(insert here the
overall liability limit for Material Damage + Loss of Profit). In respect of
several insurances within the same compound / location with all the Indian
insurers, the maximum aggregate loss (MD+LOP) payable per compound /location
shall be Rs.200 crores. If the actual aggregate loss suffered at one compound /
location is more than Rs.200 crores, the amounts payable under individual
policies shall be reduced on pro rata basis. The coverage under this endorsement
is subject to an excess of Re. 0.5% of the total sum insured subject to a
minimum of Rs. 1 lakh for each and every claim in respect of both material
damage and loss of profits combined."
8) Treatment of surcharge applied from 1-10-2001: 10% surcharge
on account of terrorism was applicable w.e.f 1-10-2001. All such insurance will
be cancelled on pro rata basis as on 31-3-2002 and fresh insurance will be
effected w.e.f 1-4-2002 for the unexpired period with the revised rates for
terrorism risks on pro-rata basis. In the case of insurance of risks where the
insurers may have already concluded reinsurance arrangements and such
cancellation is not required by reinsurance arrangements, insurers will have the
option to continue the present insurance (where 10% surcharge has been
collected) till expiry. Insurers are advised to inform their operating offices
suitably.
Secretary
INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY
D-3/IRDA/3/2002
22nd March, 2002.
To all General Insurers
Sub : Insurance of terrorism risk in the Fire and Engineering Departments
It has been reported to this office that insurers are planning to cancel
existing insurances of their clients just before 31 March 2002 and reissue
policies for one year from that date in order to give to their clients, the
benefit of lower premium and full insurance . It has also been reported that
some insurers are planning to allow 5% discount in lieu of agency commission in
respect of premium for terrorism risk.
As insurers are aware, the market took the welcome initiative of working
together to provide protection in respect of terrorism risk after 1st April 2002
when the reinsurers were reported to be withdrawing protection for terrorism
risk from reinsurance arrangements. It is most undesirable for insurers to take
any action which will be seen as subverting the market initiative. The insurers
had collectively decided that no agency commission will be payable on premium
for terrorism risk. It will therefore be improper and in violation of tariff to
allow any discount on premium for terrorism risk. It will therefore be improper
and in violation of tariff to allow any discount on premium for terrorism risk.
Insurers should desist from such action.
The move to cancel and reissue policies for one full year referred to above,
may lead to serious problems with reinsurances because if terrorism risk is
excluded from treaties, it will also be excluded from portfolio entry to the
treaty for the year 2002-2003. The net account excess of loss protections of
insurers will also not cover the risk of terrorism. Finally, GIC may exclude the
risk of terrorism from statutory cessions and will find it problematic to
carrying the risk for a full year through this method without having the ability
to protect the account.
A couple of insurers believe that their reinsurance arrangements will
continue to receive reinsurance on terrorism risk until 31 March 2003. Insurers
are requested to exercise particular care even if this be so, because the
reinsurance arrangements will not cover excess of loss protections for net
account nor will they cover the surplus after their surplus treaty is fully
utilised.
In conclusion, we would like to see the market abiding by the market
decisions not only in letter but also in spirit. Any report of insurers taking
unfair advantage in competition through the above means will be considered
seriously by this office.
(N. Rangachary)
Chairman
INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY
Circular No.
D-4/IRDA/3/2002
28th March, 2002
TO ALL GENERAL INSURERS
Re : Insurance of Terrorism Risk in the Fire and Engineering Deptts.
In continuation of our Circular No. D-3/IRDA/3/2002 dated 22nd March,
2002 we would like to clarify as under :
1. Tariff Advisory Committee has issued the following detailed circulars in
respect of Terrorism cover effective from 01-04-2002 :
2. An Insurer can cancel the current policy in its entirety on or before
March 31, 22002. However, whenever a fresh policy is issued, effective
from or after April 01, 2002, rates & terms applicable for terrorism will be
as per the revised rates effective from April 01, 2002 communicated by the
Tariff Advisory Committee vide their circulars mentioned in 1 above. In no case
it is permissible to cancel and/or pre-pone an insurance to enable any insured
to get coverage for terrorism risk at rates & terms different from what has
been stipulated by the Tariff Advisory Committee w.e.f. April 01, 2002.
3. In terms of Circular dated March 23, 2002 General Insurance Corporation of
India (as the Manager for Terrorism Pool) where an insured wishes to continue
cover for terrorism risk under an existing policy beyond April 01, 2002,
insurers may provide such extension at pro-rata extra premium of the 10%
surcharge up to the expiry of the current policy. However, the extension for the
terrorism cover will be as per the revised wordings contained in the circulars
issued by the Tariff Advisory Committee as mentioned in 1 above. Also renewal of
the current policy will be only at the revised rates applicable for terrorism
risk effective from April 01, 2002.
4. The circulars issued by TAC provide for deductible of 0.50% of the total
sum insured for each and every claim subject to a minimum of Rs. 25,000/Rs.
1,00,000/ as applicable. The deductible will be subject to a maximum of Rs. 10
crores for each and every claim.
5. The rates prescribed by Tariff Advisory Committee w.e.f April 01, 2002 for
terrorism risk are net rates and will not be subject to any discount/commission.
(N. Rangachary)
Chairman
PROVIDED nevertheless that the Company is not relieved under (c) or (d)
above of any liability to the Insured in respect of physical damage to the
property insured occurring before dispossession or during temporary
dispossession.
Total Sum Insured
(MD+LOP) (Rs) (TSI)
Premium on
TSI
Overall Liability
(MD+LOP) Cap
Upto 200 crores
Full rate
200
crores
Over 200 crs. to 250
crs.
97.5% of full
rate
''
Over 250 crs. To 500
crs.
95% ''
''
Over 500 crs. To 1000
crs.
90% ''
''
Over 1000 crs. To 1500
crs.
85% ''
''
Over 1500 crs. To 2000
crs.
80% ''
''
Over 2000
crs.
75% ''
''
Circular
No.
Date
FT/1/2002
13-03-2002
FT/2/2002
13-03-2002
Engg/Gen-4/24/16/17/2002-14
11-03-2002
Engg/Gen-4/24/16/17/2002-15
11-03-2002
TARIFF ADVISORY COMMITTEE
HEAD OFFICE: ADOR HOUSE
1ST FLOOR, 6,K. DUBASH MARG,
MUMBAI - 400 023.
____________________________________________________________
To: 1. All insurers including State Govt. Insurance Depts., carrying general
insurance business in India.
2. IRDA, New Delhi
3. General Insurance Corporation of India
4. All Regional and Divisional Offices of Tariff Advisory Committee
5. Audit Department, Government of India
Mumbai/Calcutta/Delhi/Chennai.
____________________________________________________________
Sub : Constitution of Technical Committees of TAC
As per the decision taken at the TAC meeting held on 3-11-2001, various Technical Committees of TAC are constituted as under :
Fire Committee :
Name of the member Name of the Company Status
Smt. Gowri Swaminathan, Reliance General Insurance Co. Ltd.,- Main
Shri H. Srinivasan, Reliance General Insurance Co. Ltd., -Alternate
Shri M. Ramprasad, National Ins. Co. Ltd -Main
Shri C. D. Rama Krishnan, National Ins. Co. Ltd -Alternate
Shri A. Jaganathan, Royal Sundaram Alliance Ins. Co. Ltd. -Main
Shri S. Selvaraj, Royal Sundaram Alliance Ins. Co. Ltd.- Alternate
Shri M. D. Jhala, New India Assurance Co. Ltd.- Main
Shri Abhay Gujar, Bajaj Allianz Ins. Co. Ltd- Main
Smt. V. Sushila, General Insurance Corpn.- Main
Smt. S. Saraswati, General Insurance Corpn -Alternate
Miscellaneous/Motor Committee :
Shri Harbinder Singh, ICICI-Lombard Gen. Ins. Co. Ltd.- Main
Shri Sudhir Salian, ICICI-Lombard Gen. Ins. Co. Ltd. -Alternate
Ms. S. Padmini, National Ins. Co. Ltd.- Main
Shri J. K. Singh, National Ins. Co. Ltd. -Alternate
Shri Krishnamoorthy Rao, Bajaj Allianz Ins. Co. Ltd. -Main
Shri Sen Sarma, IFFCO- Tokio Gen. Ins. Co. Ltd.- Main
Shri Abhay Kumar, IFFCO- Tokio Gen. Ins. Co. Ltd.- Alternate
Shri Gaurav Garg, TATA-AIG Gen. Ins. Co. Ltd. -Main
Shri D.T.V. Shastri, General Insurance Corpn. -Main
Shri M.N. Pai ,General Insurance Corpn.- Alternate
Engineering Committee :
Shri E. S. Kannan ,United India Ins. Co. Ltd.- Main
Shri S. K. Bansal, United India Ins. Co. Ltd. - Alternate
Shri Yogesh Lohiya, Oriental Ins. Co. Ltd.- Main
Shri A. K. Roy, Oriental Ins. Co. Ltd. - Alternate
Shri S. Selvaraj, Royal Sundaram Alliance Ins. Co. Ltd.- Main
Shri A. Jaganathan, Royal Sundaram Alliance Ins. Co. Ltd. -Alternate
Shri R. Raman, TATA-AIG General Ins. Co. Ltd.- Main
Shri M. Padmanabhan New India Assurance Co. Ltd. Main
Shri A. Sant, General Insurance Corpn.- Main
Shri K. Ragunath, General Insurance Corpn.- Alternate
Petrochemical Committee
Shri M. D. Jhala, New India Assurance Co. Ltd.- Main
Shri R. Senthil Kumaran, United India Ins. Co. Ltd.- Main
Shri S. Thiagarajan, United India Ins. Co. Ltd.- Alternate
Shri Yogesh Lohiya, Oriental Ins. Co. Ltd.- Main
Shri A. K. Roy, Oriental Ins. Co. Ltd.- Alternate
Shri R. Raman, TATA-AIG Gen. Ins. Co. Ltd. - Main
Shri H. N. Pathak, Reliance General Insurance Co. Ltd.- Main
Shri R. Roychowdhury, Reliance General Insurance Co. Ltd. - Alternate
Shri G. Muntaqua, General Insurance Corpn.- Main
Shri A. Sant, General Insurance Corpn.- Alternate
Marine Committee Will be constituted as soon as recommendation are received from the General Insurance Council.
Note : An alternate member will attend the meetings of the Technical Committees only when a main member is unable to be present
Insurers are requested to advise their officers who are nominated to the various Technical Committees as mentioned above, suitably.
Secretary
Re : Rating of Health Resorts under All India Fire Tariff
The Tariff Advisory Committee has decided to rate the above occupancy under Risk Code2, Rate Code02 of Section III of the AIFT. Accordingly, the existing tariff entry stands modified as under :
| Risk Code | Rate Code | Description of Risk | Building Rate
Rs.per mille |
Contents Rate
Rs.per mille |
| 2 | 02 | Cafes, Restaurants, Hotels, Confectioners & Sweetmeat Sellers, Health Resorts | 1.80 | 1.80 |
The above decision will be effective for all fresh business and renewals falling due on or after the date hereof.
Insurers are requested to inform their operating offices suitably in this regard.
Secretary
Re : Rating of Lignite Handling System under All India Fire Tariff
The Tariff Advisory Committee has decided to introduce a new tariff entry as below in section IV of AIFT to take care of the above occupancy :
| Risk Code | Rate Code | Name of Tariff Item | Rate
(Rs.per mille) |
| 55 | 9 | Lignite Handling System | 2.5 |
The above decision will be effective for all fresh business and renewals falling due on or after the date hereof.
Insurers are requested to inform their operating offices suitably in this regard.
Secretary.
_____________________________________________________________
Re : Rating of Bus Terminus
The Tariff Advisory Committee has decided to rate the above occupancy at Rs.6.00%o at par with vehicles in open/ vehicle parking area under Section VI with Risk Code no. 20 and Rate code 19.
The above decision will be effective for all fresh business and renewals falling due on or after the date hereof.
Insurers are requested to inform their operating offices suitably in this regard.
Secretary.
____________________________________________________________