The Hindu Business Line : ONGC offshore asset valuation higher this year

The quantum of premium is likely to be softer compared with last year as the risk element linked to natural disasters is expected to be less this year.

New Delhi March 21 With ONGC's offshore platform insurance coming up for renewal and stakes running higher than the previous year, all eyes are on the scheduled meeting between the ONGC Chairman and Managing Director, Mr R.S. Sharma, and the brokers appointed for obtaining quotes from re-insurers in order to finalise policy terms. The meeting is expected to take place in London beginning March 23, sources said.

ONGC is one of the biggest buyers of insurance in the world and said to be the largest in India. Indications are that the size of the policy may see a substantial jump from the current $12 billion, which was the offshore asset valuation last year. While declining to give the figure of valuation, sources said it would be much higher than last time. However, the company, which paid a premium of $40 million last year, is expecting to pay less this time around.

The company has appointed five brokers — Aon Global - Aon Ltd; Marsh India -March Mc Lennan; Heritage Insurance Brokers Pvt Ltd - Jardine Lloyd Thomson; J B Boda - Benfield and K.M. Dastur - Cooper Gay — for obtaining the quotes from re-insurers. Sources told Business Line, "though we are expecting the valuation to be much higher, the quantum of premium is likely to be softer compared with last year as the risk element linked to natural disasters is expected to be less this year." Last year, not only were there natural calamities but also greater hike in risk perception, the sources added.

ONGC offshore platform insurance is coming up for renewal in May. United India Insurance Company is the lead insurer for this account. Indications are that United India Insurance, in all probability, would continue to be the lead insurer, as it has met its commitments earlier.

Recently, United India settled a claim for Rs 1,700 crore to ONGC for the loss in the Bombay High North accident in July 2005 under the offshore package policy.

The BHN accident caused a major fire, which totally destroyed the platform, while multipurpose support vessel (MSV) `Samudra Surkasha', which sustained major damages, sank on August 2, 2005.

The heat and smoke of BHN fire partially affected other installations also including the interconnecting bridges of the MNW and BHF platforms and sub-sea pipelines. ONGC's offshore properties damaged in the above accident were insured with United India under ONGC's Offshore Package Insurance Policy. The claim settlement was facilitated by the reinsurance broker Jardine Lloyd Thompson, London, and supported by their Indian partner Heritage Insurance Brokers Pvt. Ltd.