Tough market for power companies

The hardening of the international reinsurance markets as a result of the spate of recent hurricane claims in the US and Mexico is making it difficult for the Indian public sector insurers to find reinsurance cover for big energy risks. The sudden lack of international capacity could mean that insurers will have to absorb the risks directly onto their balance sheets. Since the beginning of this year, most of the industrial groups in India have been quietly moving from the tariff-driven corporate insurance covers and to the new mega risk covers which are substantially cheaper to products administered by the Tariff Advisory Committee (TAC) of the Insurance Regulatory and Development Authority (IRDA).