Sri Lanka's National Insurance Trust Fund (NITF) has decided to provide Rs. 25m ($0.14m) in advance insurance claims to The Kingsbury and Cinnamon Grand hotels each following terror attacks across eight locations of the country last Sunday.
No assessment has been conducted yet on the total damage from the attacks, reported the Daily Financial Times. Speaking to the publication, NIFT Chairman Manjula de Silva said the fund expects additional claims particularly for vehicles that may have been damaged in the explosions although the amount is expected to be small. Over 90% of total claims is anticipated to be from the two hotels.
“As so often happens, events like this, including natural catastrophes, produce an upturn in the demand for insurance cover. It will be interesting to see whether the insurance market is prepared to offer future protection and, if so, at what cost,” said Concordia Consultancy (Asia Pacific) group technical director and managing director Graham Purdon who flew to Colombo to handle his firm’s response as chartered loss adjustors and risk consultants for Sri Lanka-based clients.
Sri Lanka was taken by surprise with the well-coordinated terror attacks on Easter Sunday as the country was perceived to have a low terrorism risk after a protracted civil war between the separatist Tamil Tigers and the government ended in 2009.
The country was actually rated low in terms of terrorism risk in Willis Towers Watson’s 2018/2019 terrorism pool index. A report on the index states that the strike, riot, civil commotion and terrorism (SRCC&T) cover of the National Insurance Trust Fund (NITF) provides reinsurance for strikes, riot, civil commotion and terrorism activities as an elective extension to basic insurance policies issued by its member companies. It provides coverage for all property loss or damage caused by strikes, riots, civil commotion and terrorism acts within the geographical limits of Sri Lanka.
Premiums unlikely to spike
Commenting on reinsurance premiums rising due to the attacks, Mr de Silva said, “The Easter Sunday terror attacks were just one unfortunate incident after almost 10 years of peace, therefore it’s unlikely that the reinsurance premium will go up immediately, unless it happens over a period of time because of gradual increase of security threats.”
According to Daily Financial Times, insurers have been inundated with enquiries from both corporates and individuals to include general insurance terrorism cover for their existing policies.
It also reported that the industry is confident that it has the capacity and resources to take up the possible risks that could emerge in future.