Insuring Road for National Development
Infrastructure sector is one of the key drivers globally for country’s economy. The Indian Infrastructure sector has been for long the catalyst for propelling India’s economic growth and hence it enjoys immense focus from Government. A world class infrastructure not only facilitate the growth of other businesses but contribute directly to direct employment to millions. At a time when the contribution of industry is going down in GDP,the infrastructure sector accounts for nearly 26.7 % of the country’s industrial output. According to Crisil, India’s Infrastructure spending is projected to accelerate around Rs. Billion 50K between FY18 and FY22 providing a foundation for rapid and inclusive economic growth in the country. Infrastructure sector includes power, energy, dams, railways, roads and urban infrastructure development.
Insurance has traditionally been playing a supportive role to the infrastructure industry and sharing risk mostly in the area of direct property and machinery losses. Over time, projects and project contracts have become more complicated and there is increased demand for seamless coverage to the project from the beginning till the end including loss of profits and delay in start-up. An additional dimension of risk that looms large over the infrastructure industry is in the area of weather and technology risk (Renewable energy projects) and liability which is again growing with the number of transcontinental high-value contracts, more global consumers and higher levels of awareness.
Key drivers in Indian Infrastructure sector
AUTHORS Vikas Rana, Student , PGDM – Insurance , BIMTECH Prof. Manoj K Pandey, Faculty , BIMTECH
Published : The Insurance Times, February 2019
- Infrastructure Needs- According to the Economic Survey 2017-2018, India will require investments of about USD4.5 trillion by 2040 to develop infrastructure to improve economic growth and community well-being. The Current trend shows that India can meet around USD3.9 trillion infrastructure investments out of USD4.5 trillion. The cumulative figure for India’s infrastructure investment gap (difference between the required infrastructure and the current economic infrastructure) would be around USD526 billion by 2040.
- Government Initiatives- The government has given a massive push to infrastructure by allocating Rs 5.97 lakh crore for infrastructure in the Union Budget 2018-2019.Various policy changes and new initiatives have been introduced by the Government in different infrastructure sectors to fast track the growth of projects.
- Global Private Equity investment-Large Global Private Equity players are entering the Indian Infrastructure market mainly in Roads and Renewable sector , the Infrastructure sector has seen 25 deals worth over $ 3.2 billion so far this year (up to May, 2018), against 42 deals worth over $ 4.6 billion in 2017.
- Bharatmala Pariyojana
- Other Schemes
- Act of God Perils i.e. Landslide, Flood, Earthquake, Lightning, Inundation etc
- Topographical Exposures like Roads through hills and/or mountains can generally suffer from landslide while Roads in flat areas are more prone to inundation, sandstorms
- Riots, Strike in a project area may lead to possible destruction of already built roads and delay in the project
- Faulty design for road construction leading to caving in and other damages
- Blockage of access to materials due to transit risks and losses
- Burglary and theft of construction materials
- Damage to Construction machinery
- Third Party Liability –Bodily Injury or Property Damage
- Contractor All Risk Insurance
- Fire and allied perils (13 events/perils covered),
- Accidental damage during construction
- Act of God i.e. Earthquake, Landslide/Rockslide/Subsidence,
- Water damage, flood, inundation, typhoon, cyclone
- Collapse, Collision, Theft and Burglary, Malicious damage
- Third party Liability with/without cross liability cover
- Owner surrounding property cover
- Removal of debris
- Expediting cost cover (expediting the process of getting machinery etc)
- Construction plant & Machinery
- Additional custom duty
- Advanced Loss of Profit
- Contractor’s Plant and machinery Insurance
- Fire and lightning
- Burglary, theft
- Riot, strike, malicious damage
- Accident damage while at work due to faulty handling dropping or falling, collapse.
- Civil Engineering Completed Risk Insurance
- Impact of land borne
- Earthquake, volcanism, tsunami
- Flood or inundation
- Subsidence, landslide, rockslide or any other earth movement
- Vandalism of individual persons
- Fire, lightning and explosion
AUTHORS Vikas Rana, Student , PGDM – Insurance , BIMTECH Prof. Manoj K Pandey, Faculty , BIMTECH
Published : The Insurance Times, February 2019
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