A three times increase in the cost of insuring power projects has irked thermal power generation companies. The higher cost of insurance is being attributed to a February circular by the General Insurance Corporation of India (GIC).
In a letter written last week to the Ministry of Power, the Association of Power Producers (APP) said, “Due to the new GIC Re circular, the insurance premiums for power plants, say of 1,000-MW unit size, have significantly increased…The increase has been over 200 per cent which is against the basic principle of insurance.”
GIC Re is the country’s largest reinsurer. It has a treaty with insurance companies that allows the pooling of capital by various reinsurers to provide reinsurance support. The February circular said the insurers who want to get the benefit of the treaty will have to quote higher premium rates from March 1 for providing cover to companies in eight sectors that report higher claims.
