—
Vijay Rampal, Chief Executive Officer, Mata Insurance Advisory & Broking Services Pvt. Ltd
Mata Insurance
Advisory & Broking
Services Pvt. Ltd is a
Mumbai-based
intermediary offering
professional insurance
and reinsurance
solutions with emphasis
on product innovation
to meet specific needs of
the domestic market.
Vijay Rampal dissects
the Indian project
insurance sector in
this interview
to Projectmonitor.
With huge infrastructure projects
underway, what is the potential
for project insurance in India?
Project insurance has been there
for decades and those who
undertake such projects,
whether government, public
sector or private sector, obtain
insurance to protect themselves
financially as enormous inputs
in the form of capital, human
resources and technical expertise
are involved. Any catastrophe
can ruin the project resulting
into huge losses which is difficult
to bear. The damages not
only result into losses but also
effect production and third party
liability.
With the new developments,
particularly in economic and
industrial area, apart from projects
like manufacturing units,
sales units and medium size factories,
a large number of infrastructure
projects like constructing
roads, canals, flyovers and
bridges, and industrial units are
coming up in large numbers.
There is therefore huge potential
for this class of insurance.
The project insurance segment in
India is still at the nascent stage.
How do you foresee the market
evolving in next few years?
Project insurance is not at the
nascent stage. As stated earlier,
it has been there for decades.
The only difference is earlier
with slow economic development
the number of projects was
less. With economic development
picking up fast and the
projects coming up, not necessarily
in urban areas, there is a
need for infrastructure build
over a wide area and a sizeable
number of projects have come
up and will continue. Naturally
the need for project insurance
would enhance manifold. Thereis therefore a huge market for this
insurance and it will widen further.
What are the various types of
risks attached to a project?
Generally, there are three types of
insurance covers catering to this
segment of the market viz.
contractor's All Risk Insurance,
Erection/Storage All Risk Insurance
combined with Transit insurance,
and Contractors Plant and
Machinery insurance.
To describe them very briefly, the
CAR is a specially designed insurance
cover to take care of the
requirements of the contractor
who undertakes to build the projects.
From its very name it would
be observed that it is a special
cover for the contractors as such. It
can include the interest of the
principal as well. The EAR insurance
is mainly designed for the
principal who owns the project but
also can include the contractor's
interest. The CPM takes care of
the machinery, tools, and equipment
of the contractor which are
utilised for building the project.
All these covers are on 'All Risk
basis' but there are certain exclusions
like willful misconduct of the
insured, the inevitable losses etc.
Insurance take care of losses
occurring fortuitously and not
those caused deliberately or
intentionally. The exclusions are
for the latter losses.
What is the share of private vis-àvis
public sector players in the
Indian project insurance market?
Do you foresee the share of private
players increasing?
As stated earlier, the risk involved
is quite huge. It requires a large
financial capacity for the insurers
to take the risk. The risks in majority
of the cases are reinsured
depending on retention capacity
of the particular insurer. Private
sector insurers are comparatively
new with limited capacity whereas
the public sector insurers have
much large capacity.
Private sector insurers are comparatively
young with limited
capacity whereas public sector
insurers have comparatively
much large capacity. The PSUs
hitherto were quite dominating in
this segment of insurance but the
private sector is picking up well
with reinsurance arrangements
and certainly the private sector's
market share will increase.
How different is the Indian project
insurance market when compared
to other nations?
Project insurance being of huge
size, as mentioned previously,
requires reinsurance in the international
market. There is therefore
not much difference between
project insurance in India and
international markets. There is a
limited number of reinsures in the
international market who can take
these risks; hence the covers are
more or less identical.
What is the long-term strategy of
Mata Insurance Advisory and
Broking Services Pvt. Ltd?
Our focus is on corporate sector
which obviously includes such
large risks. Our marketing
efforts are to capture new projects
that would come up. The
project insurance policies are
issued for the period of the project.
There is no question of
renewing the insurance once the
project is completed. One has
therefore to look for new projects
all the time.