Indian Oil Corporation (IOC), one of the Fortune 500 listed Indian company procured whooping 5000 crore insurance cover for each of its 10 refineries. A deal was signed by IOC with insurers led by United India Insurance company (UIIC) to cover Rs 5,000 crore per refinery if the company had to face business interruption for more than 60 days.
IOC has an estimated refining capacity of 65.7 mmtpa (million metric tonnes per annum) combined from all its refineries. According to the United Insurance cover, it includes damage resulting from fire or any natural calamity, loss of profit due to business interruption and any other damage to its property, plant and machinery. However, initial loss of 5 crore damage is borne by IOC.
The co-insurers are namely New India Assurance, National Insurance and Oriental Insurance.
IOC has agreed to pay a premium of Rs 55.28 crore per annum, with last year premium at Rs 54.27 crore per annum. Experts reported it to be a good deal as the insurers recently raised premium rates by 50% over the last year for Reliance Industries-owned Indian Petrochemicals Corporation Limited (IPCL) after they incurred a claim of Rs 1,000 crore on account of business interruption.