The government is setting up an Indian Energy Insurance Pool, a fund to provide insurance to domestic refineries that have been refused cover by European re-insurers for processing Iranian crude, with a corpus of Rs 2,000 crore. The government will also provide sovereign guarantee for losses up to Rs 10,000 crore.
According to decisions taken at a meeting called by national security advisor Shivshankar Menon last month, the oil ministry and the Oil Industry Development Board (OIDB) — a body under its wings — would jointly commit Rs 1,000 crore. All the public sector general insurance companies will together provide a matching capacity of Rs 1,000 crore. Private sector general insurance companies could voluntarily chip in with additional cover capacity, with matching commitment from the ministry and OIDB.
A taskforce has been set up under the Insurance Regulatory Development Authority member (non-life) to organize and get the insurance pool off the ground. Sources said the taskforce, during its first meeting held on March 18, suggested that the government shall provide sovereign guarantee for losses in excess of Rs 2,000 crore, which may go up to Rs 10,000 crore. This is expected to create additional capacity and comfort level for the insurance pool.
source: Times of India