INSURANCE POOLS

Pool, also known as association or syndicate are common in insurance. Pool is an organization of Insurers or Reinsurers through which pool members underwrite particular types of risks with premium. Losses and expenses shared in agreed amounts. Pools in Indian market are being administered by GIC Re. The Pools for various classes so far formed in Indian market are:

FIRE POOL: THE Pool was operational between erstwhile subsidiaries of GIC and was in existence till 2001. The sharing was on the basis of premium contribution to the pool..

HULL POOL: The Pool is operational even today between four Public Sector Undertakings i.e. erstwhile subsidiaries of GIC. The sharing of experience of the pool is in equal proportion for all the members irrespective of fact who contributes to the pool.

TERRORISM RISK INSURANCE POOL: After the Sept. 11, 2001, terrorist attacks in the United States, the regulator set up a terrorism risk pool with the aim to provide capacity in the domestic market to underwrite terrorism risks. The Pool was operational since 2001 wherein all insurance companies including GIC are members. The sharing of experience is on the basis of the loss bearing capacity extended by each of the members to the Pool. IRDA has announced that the terrorism pool for non-life insurance will go up from current level of 7.5 billion rupees (118.3 million euros) because non-life insurers are facing more claims in India.

MOTOR THIRD PARTY POOL: The Pool is formed for coverage of Commercial Motor Vehicles Third Party Liability exposure only and is operational since April 2007. The sharing of experience is on the basis of the market share of the each of the company in “Gross Direct Premium” for the year under consideration. GIC, the Pool manager, is also a member of the Pool to the extent of Obligatory share. From April 1, 2009 IRDA has reduced the administration fee to be paid to GIC from 2.5 per cent to 1.25 per cent of the total premium on motor third party insurance business.

NUCLEAR POOL: Nuclear power generation is a high risk prone business. In India, to cover the risk relating to new nuclear activities has been established by four local general insurance companies. This Nuclear Pool is operated as the lead insurer by New India Assurance Co. Ltd, and supported through co-insurance by remaining three non-life insurance companies and further supported by the GIC and International Reinsurers for reinsurance.