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General Insurance Company

General Insurance Company

Industry: 
Insurance
Country: 
India
Contact Information: 
Sources: 

"The government will provide a 10 billion rupee sovereign guarantee to back local insurance for refineries using Iranian oil, two government sources said, as it tries to boost imports paid for in local currency to ease pressure on the rupee . . . 'It was finalised yesterday in a meeting with the petroleum secretary. An energy pool will be set up with a sovereign guarantee,' one of the sources, both of whom have direct knowledge of the matter, said . . . 'The issue has been resolved. GIC (local reinsurer General Insurance Corp) will manage the pool. In case there is any mishap or something, then they will pay,' the second source said. The sources said apart from the 10 billion rupees sovereign backing, GIC and oil companies will provide 5 billion rupees each to the pool . . . With the start of this re-insurance cover local insurers will delete the sanctions clause from the existing annual policy of Indian refiners processing Iranian oil, two oil industry sources told Reuters." (Reuters, "Government to back up insurance for refiners processing Iranian crude," 9/18/13)

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"India is thinking of providing a 20 billion rupee ($327 million) state guarantee to back local insurance for refineries that use Iranian oil and therefore cannot get foreign cover due to Western sanctions, an industry source said. The government has previously ruled out such a guarantee but a drop in India's currency to record lows means it is keen to boost oil imports from Iran, which has agreed to be paid in rupees, as dollar-priced oil imports have grown more expensive. he finance ministry is now willing to consider covering half of a planned total 40 billion rupee fund for underwriting such insurance, to which the oil ministry and local insurers would contribute 10 billion rupees each. The finance ministry decided to consider a 'facility/sovereign guarantee' of 20 billion rupees at a meeting chaired by the financial services secretary on July 31, the source said on Thursday... If the finance ministry suggestion goes ahead, Indian refiners would be able to take up local insurance backed by Indian reinsurer General Insurance Corp (GIC), which can tap the government fund and sovereign guarantee... The finance ministry plans to allow refiners to take up insurance cover from companies outside India, as well as domestic providers, if they are not limited by that clause, the source said. State-run refiner MRPL (MRPL.NS), which used to be Iran's biggest Indian client until insurance problems prompted it to stop purchases in April, has already indicated that it will resume Iranian imports from this month." (Reuters, "India mulls guarantee for insuring refiners that use Iran oil -source," 8/8/13)

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"'MRPL would take all necessary steps for recommencement of import/processing of Iranian crude oil in its refinery,' MRPL P.P. Upadhya wrote in a June 29 letter to Oil Secretary Vivek Rae. Upadhya referred in the letter to meetings with officials from the oil ministry and local reinsurer General Insurance Corp. (GIC) in the letter, copy of which was made available to Reuters, for the plan to resume imports from Iran... GIC said that 'as long as the waiver on import of crude oil from USA exists, it is very likely that the overseas reinsurers would not refuse the claim whenever it arise, even though the implication of waiver is not clear,' the letter said, citing a June 27 meeting with GIC. GIC would be able to settle any claim up to 5 billion rupees, so far the maximum that has arisen in Indian refining sector, without depending on overseas reinsurers, Upadhya wrote. 'GIC pointed out that in such a scenario, a calculated business risk may be taken by MRPL, similar to what is being taken by Essar, if they desire to recommence processing of Iranian crude oil at their refinery,' Upadhya wrote in the letter." (Reuters, "MRPL Aims to Resume Iran Oil Imports," 7/1/2013)

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"Two of India's largest shipping companies which carry crude from Iran haven't yet been able to find suitable insurance cover, a situation which could hurt the flow of oil from the sanctions-hit Middle Eastern country.  . . . India, which has decreased but not stopped crude purchases from Iran, has been trying to make its own arrangements to bring in the oil. Last month, state run insurer United India Insurance Co. Ltd. offered cover to Indian shippers, while General Insurance Corp. offered to reinsure. Mr. Hajara had said then that the shipper may agree to the covers -- about a hundredth of what Europe's so-called Protection and Indemnity or P&I Clubs offer -- but he now appears to have changed his mind. The Indian insurer has offered $50 million for protection and indemnity -- or third-party insurance -- and an additional, similar amount for hull and machinery cover. But these are not enough, said Mr. Hajara." (Wall Street Journal, "Shipping Corp: Insurance Cover for Iran Crude Not Adequate," 8/8/12)

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"India, the third-biggest buyer of Iranian oil, will offer state-backed insurance to tankers, helping the nation’s biggest sea carrier to resume cargoes from the Persian Gulf nation hit by international trade sanctions.

Shipping Corp. of India will soon start services to Iran as Indian insurers have agreed to give as much as $100 million of cover per voyage, Chairman Sabyasachi Hajara said without specifying a timeframe. Prior to the sanctions, European companies provided unlimited protection against risks including oil spills and collisions, he said…Hajara said insurers including United India Insurance Co. and General Insurance Corp. of India are offering a lower cover for Iranian shipments compared with their European counterparts because the sanctions blocked their access to reinsurance.

The Indian insurers are offering $50 million of hull and machinery cover and $50 million of protection and indemnity per voyage, he said…Shipping Corp. is going ahead with the plan as its studies have shown that carriers in the Iran-India route haven’t sought any claims from insurance companies in the past 10 years, he said. Still, potential liabilities may run into “billions of dollars,” Hajara said." (Bloomberg, "Iran Oil Shipping To Resume As Insurers Step In," 8/2/12)

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"India has been forced to seek its own arrangements to insure its purchases of Iranian oil, officials said, even as it reduces imports under pressure from U.S. and European Union sanctions.

Indian state-owned insurers, shipping lines and government officials met to discuss the situation in Mumbai on Wednesday. India's state-run insurance firms have agreed to offer coverage of up to $50 million for each Indian ship carrying Iranian crude. The state-run General Insurance Corp. will reinsure the cargoes. Such coverage is much lower than the up to $1 billion that European insurers would normally give per ship to cover third-party claims in the event of an oil spill or other accident…The problems facing India show the effectiveness of policies aimed at squeezing Iran financially in a bid to force the country to take measures that guarantee its nuclear program isn't being used for weapons development. Tehran says the program is for peaceful purposes.

'This figure is low but we can call it a workable solution,' the executive said. 'Liabilities in case of an accident in Indian or Iranian waters is also less than in U.S. waters.'

The Indian shipping industry was also pushed to accept low insurance coverage because it doesn't want to see its business going to Iranian tankers, the executive said.

'The petroleum ministry wants to bring crude in Iranian vessels which will hurt business for Indian ships, so we accepted this figure,' he said." (The Wall Street Journal, "Insurance Woes Slow India Deals for Iran Oil," 7/11/2012)

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"India has given state-run insurers approval to provide limited cover to its ships transporting Iran's oil, allowing refiners to avoid any interruption in supplies because of the constraints of an Iranian fleet struggling with tough Western sanctions . . . General Insurance Corp of India will be the re-insurer and cover will be extended by any of four state-run non-life insurance firms: United India Insurance, New India Assurance Co. Ltd., National Insurance Co. Ltd. and the Oriental Insurance Co. Ltd. 'We have received a letter from the shipping ministry ... saying General Insurance Corp has provisionally been allowed to arrange cover,' said a source at a state-run refiner."(Reuters, "India insures Iran oil imports to safeguard flow -sources," 7/10/12)

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"United India Insurance Co. has agreed to provide protection and indemnity cover to Indian tankers carrying oil from Iran with General Insurance Corp. offering reinsurance, two people with knowledge of the matter said Tuesday. The offer bring some relief to Indian shipping companies that aren't getting covers from European insurers since July 1 for carrying shipments from Iran, which is facing sanctions from the U.S. and European Union for its decision to continue with an alleged nuclear weapons program . . . While United India Insurance executives weren't available to comment, an executive from General Insurance Corp. said there will be a $50 million P&I cover and a separate amount for hull and machinery. 'The cover is for all Indian shipowners,' the executive said." (Wall Street Journal, "India Insurer to Cover Ships Carrying Iran Oil," 7/10/12)

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"The United States earlier this month extended exemptions from its tough, new sanctions on Iran's oil trade to seven more economies including India . . . Indian state insurers led by General Insurance Corp (GIC) had agreed to provide $50 million of cover for the ships carrying Iran crude from July but this has been delayed as the insurance regulator has not yet given its approval. The Shipping Ministry has said it has "no objection" to refiners buying oil from Iran on a delivered basis 'for 6 months with effect from July 1, 2012 or until GIC provides P&I/H&M (Hull and Machinery) cover or U.S., EU sanctions are lifted; whichever occurs earlier,' said a source privy to the letter." (Reuters, "Exclusive: India allows use of Iran ships for oil imports," 6/25/12)

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"India is speeding up efforts to ensure insurance cover for tankers that bring in crude-oil from Iran, about a week before the onset of European Union sanctions that will effectively cut off insurance services for oil shipments from the Islamic Republic…But India continues to face logistical challenges in importing oil from Iran as the EU sanctions, which come into effect on July 1, are affecting its ability to get insurance for ships carrying Iranian crude...the oil ministry has also asked the finance ministry to press state-owned reinsurer General Insurance Corp. to provide insurance cover to Indian ships carrying crude from Iran. The oil ministry is also working to get sovereign guarantees for Indian vessels, he added."  (Wall Street Journal, "India Working on Insurance for Iran Oil Imports," 6/22/12)

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"Indian shipping firms will continue to transport Iranian crude even if limited insurance coverage due to tightening Western sanctions leaves them financially exposed to a spill or accident, a top executive and industry sources said... Shipping Corp of India, which is the country's largest shipping firm, Great Eastern and other Indian tanker firms have asked state insurers to step in and provide up to $50 million in third-party liability coverage per tanker voyage. The amount is a fraction of the typical $1 billion coverage that a supertanker carrying around 2 million barrels of crude would have from reinsurers against personal injury and pollution claims. India's shipping companies would run the risk of shipping the crude even though they would be liable for any claims above $50 million in the case of an incident, industry sources said... The shipping firms have sent their request to state insurers United India Insurance, General Insurance Company, New India Assurance Co. Ltd., National Insurance Co. Ltd. and the Oriental Insurance Co. Ltd., said a shipping source. The shipping and finance ministries were also looking at the proposal." (Chicago Tribune, "Indian firms to carry Iran crude despite reduced insurance," 4/24/12)