The Hindu Business Line : National Insurance retains Infosys account

Bangalore, July 2 For the eleventh year in succession, the public sector National Insurance Company Ltd NICL has retained the Infosys Technologies account.

NICL officials said that the company paid an estimated premium of Rs 16 crore, the same as last year. The sum assured included Rs 5,000 crore for asset coverage and another Rs 3,000 crore for liability cover, essentially implying loss of profit (LOP) risks. The risk coverage also included medical risks for Infosys’ 56,000 employees.

The officials that the assets covered were mostly in the vicinity Bangalore, Mysore, Pune, Chennai and Bhubaneshwar.

Coinsurance partners

NICL, however, is yet to decide on the coinsurance partners this year. The officials said that both ICICI-Lombard Insurance Company and Tata AIG Insurance were pitching hard for a coinsurance partnership with NICL.

Last year National Insurance’ coinsurance partner was ICICI-Lombard. The officials said that a decision on ceding 25 per cent or even 30 per cent to either of these companies would be decided only next week after negotiations with the two companies.

Although Infosys had high medical claims, the company has hardly lodged any claims on the LOP or property covers.

This, the officials said was one of the major factors that weighed in favour of Infosys. Infosys’s claims from for the medical risk cover for last year was close to 95 per cent, though below the national average of about 120 per cent.

Besides, what also weighed in favour of the info tech company were the low probable maximum loss (PML) ratios. This was largely on account of the spread of Infosys’s assets across the country.

This ratio estimates the losses of the underwriter in the case of a claim event. Consequently at any point of time the PML ratios are unlikely to exceed Rs 300 crore for the insurers, the officials said. PML ratios tend to be low in the case of information technology companies.

As a result companies like Infosys tend to be highly profitable for insurers allowing them to obtain competitive tariffs.

Mega risk cover

However, the officials said that the sum assured beyond Rs 1,500 crore were treated as mega risk covers. Mega risk covers were in any case, deregulated some time ago, and were entirely reinsurance driven.

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