Container freight stations (CFSs) and warehouses are lobbying to be excluded from the higher fire-risk cover quoted by general insurance companies following a directive from the state-run re-insurer, the General Insurance Corporation of India (GIC Re).

GIC Re has asked all local insurers to raise the fire-risk premium for eight industrial categories, including CFSs and warehouses, to get re-insurance cover.

The increase in fire-risk premium is estimated to be 9-10 times more than the present premium for both CFS and warehousing sectors, an official at the Container Freight Station Association of India (CFSAI), a lobby group, said.

The CFS and warehousing sectors have questioned the rationale for including them in the industrial categories identified for higher fire risk premium and have threatened to pass on the extra costs to their clients “if there is no option left”, the official said.

CFS operators say that they should be considered as ‘extension of ports’ as they are also termed as ‘dry ports.’ Hence, they should be treated on par with ports. CFSs act as short transit points and their activities are similar to ports, which are not covered under the GIC directive.

The warehousing sector — especially the structured ones with modern set up and facilities — cater to just in time (JIT) concept to a large extent under the ease of doing business. They also act as short transit points.

Both CFSs and warehouses handle hazardous cargo which comes under fire-risk insurance. The share is minuscule (4-5 per cent) compared to the volume of cargo of other categories. Moreover, the hazardous cargoes are properly segregated at the CFS as per standard operating procedure.

As CFS are categorised as customs cargo service providers (CCSPs), they are continuously monitored by the Customs and the State Pollution Control Boards. Hence, cargoes are handled with extreme caution at the CFS to comply with the norms.

Similarly, in structured warehouses, apart from internal control systems, they are audited by the state pollution control boards. They are also equipped with a robust fire-fighting system to address any unforeseen incident.

The premium on manufacturing rubber goods, plastics, textiles, chemicals (below 32 degrees C flashpoint), besides transporter godowns/warehousing of a transporter, steel factories and thermal power plants have been increased based on an analysis of the burning-cost ratio by the Insurance Information Bureau (IIB).

GIC Re has asked general insurance companies to add the cost of management to the IIB-identified rates and accordingly provide quotations to their corporate clients if they want treaty arrangements with it.

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