Mumbai: Oil and Natural Gas Corp. Ltd’s (ONGC) hard bargain with state-run United India Insurance Co. Ltd and General Insurance Corp. of India (GIC Re) has further brought down its annual renewal premium by almost 25% to $16 million for both insurance as well as reinsurance covers for its offshore assets valued at $34 billion.
One of the striking features of ONGC’s 2016-17 insurance renewal has been competitive bidding where the country’s only national reinsurer GIC Re has managed to outbid its international peers.
In 2015-16, two European reinsurers—Endurance and Aspen—had outbid GIC Re to be the lead reinsurer for the deal.
“ONGC has renewed its insurance account for its offshore assets worth $34 billion for a premium of around $16 million, more than 25% lower than what it had paid for last year,” a person with knowledge of the matter said on Friday.
The insurance cover, due for renewal on 11 May, has been renewed in the London markets, people familiar with the matter said.
Global general insurance prices have been heading south as claims have been lower unlike the previous year wherein claims were higher due to many catastrophes and aviation accidents. This is the second year that the state-run oil and gas major, which has the largest insurable assets in the country, has managed to get a discount.
Last fiscal, it had renewed its policies at almost 35% discount at $20 million. Given the limited capacity for risks in the country, over 80% of ONGC’s insurance cover is usually reinsured by global reinsurers.
Source: Mint; 16 April 2016