Generally, to assess the associated infrastructure risks, the insurance companies use a combination of factors such as geopolitical analysis, certain security checks, and past data on losses. Various factors directly affect the premiums of infrastructure, including political instability in that area, past claims, militant activity, etc.
Gurdeep Singh Batra, Head – Property UW (E&S), Risk Engg, Global Accounts and Coinsurance, Bajaj Allianz General Insurance, said, “Insurers conduct a detailed risk evaluation before underwriting infrastructure or property insurance in high-risk zones such as Kashmir. This assessment involves analysing location-specific risk data, including past incidents of terrorism, civil unrest, or natural disasters.”
“For property insurance in such areas, the structure’s resilience, project value, nature of construction, and safety measures in place are key considerations,” added Batra.
Besides, insurers also assess the security arrangements, workforce size, and potential business interruption exposures. Based on the risk profile, insurers may price premiums accordingly and offer coverage through specialised products such as terrorism risk insurance, contractors’ all risk (CAR), and project-specific property insurance.
However, Naval Goel, CEO of Policyx.com, said, “The insurers collaborate with security forces to calculate the associated risk. Sometimes terrorism and illegal activities remain out of the coverage.”
“However, this incident will change the way infrastructure projects are going to be insured in Kashmir from now onwards. The insurers may increase the premiums for the coverage, tighten the terms and conditions of the policy, or reduce the coverage. Moreover, insurers may also ask for additional documents regarding the safety measures taken by stakeholders or may ask to include emergency strategies with their documents,” added Goel.
The insurers may also start mandating stricter security protocols for offering the coverage. The plans launched would have strict underwriting rules. This shows that it is going to be more difficult for the stakeholders to get their infrastructure projects insured.