GIC Re denies refusing cover to Indian refineries

India’s sole reinsurer General Insurance Corporation of India (GIC), clarified that it has not refused cover to any Indian refinery dealing with Iranian crude and is only engaging in discussions to bring in clarity.

A K Roy, CMD of GIC Re said that they submitted a paper to the General Insurance Council calling for some clarity related to refineries importing Iranian crude. “We have not refused cover to any company. After discussions with the chief executives and technical teams of companies, we will decide whether they need additional cover or not,” he said. He added that one round of discussions were over and another round would happen soon.

In a recent letter to R Chandrasekharan, Secretary General of the General Insurance Council, Roy had said, “We had recently received a request from Mangalore Refinery and Petrochemicals Limited (MRPL) for a cover for their SPM on discharge of Iranian Crude. Consequently, a meeting was arranged in our office of officers from the four public sector undertakings and the cover discussed. During the deliberations it emerged that apparently the Refinery processing Iranian crude would also be out of the ambit of any cover and losses would not be payable by the reinsures on the protection programme of the companies.”

He had added in the letter that it also dawned on the insurers that this fact had not been made clear to them that they were uncovered whilst processing Iranian crude owing to the sanctions clause. “It is therefore felt that the General Insurance Council should organize for a discussion of the insurers to identify the issues involved and attempt to find out possible solutions,” he said further.

MRPL, a subsidiary of Oil and Natural Gas Corporation (ONGC) said that they are waiting for the reinsurer’s response. “We had sought an extension of cover which is under consideration. Our mega risk policy comes up for renewal this May. We are waiting for GIC’s reply on the same,” said a senior MRPL official.

Industry sources also said that the reinsurer is mulling a system of separate covers for Iranian and non-Iranian crude import. Companies including MRPL, Bharat Petroleum Corporation Limited, Chennai Petroleum Corporation Limited, Hindustan Petroleum Corporation Limited and Essar Refineries import oil from Iran. According to sources, refining companies have also written to the government seeking a cover for Iran crude import.

http://www.business-standard.com/article/companies/gic-re-denies-refusing-cover-to-indian-refineries-113020600979_1.html