Post Operation Sindoor, we're looking at war insurance cover, says GIC Re Chairman

Indian Express

15-06-2025

Operation Sindoor and the increasing use of drones in recent warfares has led insurance companies to explore the possibility of launching war insurance cover for corporates and people in border states to safeguard their investments in projects and lives there. The industry is also willing to create an insurance pool to cover defence assets provided the government gives a guarantee for the purpose, said Ramaswamy Narayanan, Chairman and Managing Director of General Insurance Corporation of India (GIC Re), the largest reinsurer in the country.
Narayanan said every insurer and reinsurer will be more than willing to write the insurance cover. 'Some part of it they can retain, they can reinsure with us, we will have our own capacities for that,' he said in an interview to The Indian Express. Stating that going forward, people may start thinking about this cover, he said, 'If you see Rajasthan and Gujarat, there are some big investments and people who have put in those investments could be worried. There could be pressure from lenders as well as damages can happen. In a traditional cover, war is not covered and so you will need to possibly buy a war cover. So there could be demand,' he said.
He said that he was waiting to see if somebody, especially those close to the border, would be interested in a war cover. 'I, however, realised that the time frame was small, and also people would have thought that looking for a cover when the event was ongoing would mean that it would be very expensive,' Narayanan said.
When asked if anything changed due to the India-Pak conflict, Narayanan said nothing changed because it was too brief to make a difference. 'I was actually waiting and we had spoken to insurance companies and brokers that if somebody wants additional cover, we are willing to look at it,' he said adding that 'drone attacks have become a big challenge and it has been seen both in the recent conflict between India and Pakistan as well as the ongoing Ukraine-Russia war.'
GIC Re Chairman said that while defence establishments in India are not insured, the industry can look to provide it just like it was done for nuclear facilities.
'Traditionally, it has never happened. I don't think even globally that is happening…. We could try, but the investments are huge. We need to have that capacity. We can manage it provided the government gives its guarantee. You charge a premium and you put it into the pool, and if for five years there are no losses, we can use the pool to pay as we would have created a kitty by then. However, if the loss happens in three months, then the pool is not enough and in that case, the government will have to say that their guarantee is there, and they will pay it off. If that kind of a thing is there, we know how to manage it for the government,' he said.
He said that normally, when insurers cover and reinsurers back up, they would want to inspect the facility and see the risk management features before giving a price and a cover, but then the government will not want their facilities to be inspected by someone.
It happened in nuclear (facilities). 'It was not covered and the government had kept it to themselves, and then later they asked us to issue a policy. We then scouted internationally for support because the cover was big. They (international partners) said that without an inspection they cannot do it (issue policy) and they would need to inspect (nuclear) facilities. We told this to the government, and they said no to it as it was a security issue. How can anybody inspect our nuclear facilities? So, then we created a pool with us and others putting their net capacities and issued a policy,' he said.
He said the nuclear pool is small because it is only the government properties which are being insured. 'But now there is a demand, so we are looking into it (for expansion). In the budget, the finance minister also made an announcement about allowing private operators. We are still waiting for the fine print to come, in terms of how it will work. Once it comes, we will open up the pool for private operators also,' Narayanan said.
'If they are open to having their facilities inspected, I am sure there should be enough reinsurers to provide capacity. But if they want to keep it closed to scrutiny, then we can use the pool,' he said.
On the impact of the Ukraine-Russia war, the GIC chairman said that the fallout was a sanction on Russia, which meant that getting products from Russia insured was a problem. 'We created a pool (currently around Rs 470 crore) by which we are providing capacity. So Russian crudes get insured under the pool. Then there are project cargo coming from Russia which gets insured under the pool. But there is a demand. Reliance Industries has been asking us to increase capacity because now they are importing more crude from Russia,' Narayanan said.