Terrorism Insurance

Terrorism Insurance in India has a distinct structure shaped by the country's unique risk profile and the establishment of the Indian Market Terrorism Risk Insurance Pool, commonly known as the Terrorism Pool. Constituted in 2002 under the aegis of the General Insurance Council and with IRDAI oversight, the Terrorism Pool is a collective mechanism through which all general insurers in India cede their terrorism risk exposure. This pooling arrangement was created after the global hardening of terrorism cover following the September 11, 2001 attacks and ensures that terrorism coverage remains available and affordable in the Indian market. Standard property insurance policies in India — including the Standard Fire and Special Perils (SFSP) policy — exclude losses arising from acts of terrorism. Businesses must purchase a separate terrorism insurance cover, which can be added as an endorsement to the SFSP policy or bought as a standalone policy. The cover extends to property damage and consequential loss of profits caused by terrorism as defined in the policy, which generally aligns with the definition under the Unlawful Activities (Prevention) Act 1967 and its amendments. The Terrorism Pool manages accumulation risk across the Indian market, with the four public-sector insurers and private-sector general insurers contributing to the pool in proportion to their market share. In the event of a catastrophic terrorism event, claims are paid from the pool's accumulated corpus and, if necessary, through additional contributions from member insurers. For businesses operating in high-risk urban centres or in sectors considered potential targets — such as hospitality, commercial real estate, aviation, and critical infrastructure — terrorism insurance is an essential component of their overall risk management programme.