The government has initiated to start an Indian Energy Insurance Pool to protect Iran oil, which will be specifically designed to provide insurance to domestic refineries that have been turned down to get the cover by European re-insurers for processing Iranian crude.
The specific insurance pool would be of 2,000 crores and the insurance will guarantee for losses up to Rs 10,000 crore, said the media report.
"The problem has arisen since under the US and the European Union (EU) sanctions, global insurers have added a "sanctions clause" in their contract that limits the amount to be paid in case of a claim. That is why domestic insurance companies have refused cover to refineries processing Iranian oil as they could not get reinsurance from their European counterparts. Reinsurance makes up for 90 per cent of the insurance cover," Petroleum secretary Vivek Rae told media.
As the insurance cover of the refineries importing oil from Iran is about to expire, this insurance would help all such refineries importing crude oil from Iran, particularly Mangalore Refinery & Petrochemicals.
Moreover, the corpus will include Rs 1,000 crore from the oil ministry and the Oil Industry Development Board (OIDB) and Rs 1,000 crore jointly from all general insurance companies. Insurance Regulatory Development Authority (IRDA) has been given the authority to organize and get the insurance pool off the ground.