Four states have taken risk covers aggregating to over 70,000 crore for metro rail projects in their capitals, bringing a windfall for insurance companies.
After the successful execution of the Delhi Metro rail service, similar projects were launched in Mumbai, Hyderabad, Chennai and Bangalore. These projects are in different stages of completion.
“Insurance companies such as Royal Sundaram, United India, National, New India and Reliance General have earned about 300 crore from these projects,” a senior executive of a general insurance company said.
According to sources, the insurance policies bought by the state governments are for the construction and installation phases and cover property, including plant, equipment, finished goods and raw materials, against damage due to fire, riots and terrorism.
“Insurance companies have insured the construction part, including advance loss of profit,” said G Srinivasan, chairman and managing director of United India Insurance Company.
“We have insured the Hyderabad project under a comprehensive policy. The contractor has insured some parts of the metro rail project,” he said.
Premium on rail projects depends on factors such as terrain, size of the project and experience of the contractor. Some insurers have already received claims under these policies.
Sources say all the four projects are behind schedule. The Maharashtra project is being executed jointly by Reliance Infrastructure, Veolia Transport and the Mumbai Metropolitan Region Development Authority, while Karnataka’s metro rail is being built by Navayuga Engineering. Hyderabad has awarded its project to L&T and Chennai to Soma Enterprise.
SHILPY SINHA,ET BUREAUÂ
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