Synopsis

Nuclear Power Corp of India (NPCIL) had budgeted Rs 30.13 crore, including taxes, for insuring Tarapur units 3 and 4 under a one-year property damage programme, said sources. The reverse auction for covering the risk, however, saw bids fall dramatically, with Oriental Insurance quoting Rs 10 crore, United India Insurance Rs 10.98 crore, and New India Assurance Rs 28.9 crore, they added.

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MUMBAI: Oriental Insurance and United India, both with solvency ratios significantly below the regulatory minimum, have undercut each other to win a nuclear insurance contract where bids to cover the unusual risks dropped to nearly a third of the budgeted premium, people familiar with the offers told ET.

Sharply lower bids than what a state-run nuclear power utility had earmarked have put the lens yet again on underwriting discipline in the loss-making general insurance sector, where three state-run companies reported negative solvency ratios as recently as FY25.

Nuclear Power Corp of India (NPCIL) had budgeted Rs 30.13 crore, including taxes, for insuring Tarapur units 3 and 4 under a one-year property damage programme, said the sources cited above. The reverse auction for covering the risk, however, saw bids fall dramatically, with Oriental Insurance quoting Rs 10 crore, United India Insurance Rs 10.98 crore, and New India Assurance Rs 28.9 crore, they added.

Individual insurers did not respond to ET's queries on the subject while NPCIL officials could not be reached for their comments.

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The insurance programme covers assets worth about Rs 7,500 crore with a loss limit of around Rs 3,000 crore, according to people familiar with the matter.

This risk was placed for around ?30-40 crore in the previous years. Industry executives said the aggressive pricing is particularly striking because the risk relates to a non-safeguarded nuclear facility, where global reinsurance capacity is extremely limited.

"Unlike civilian nuclear facilities covered under International Atomic Energy Agency (IAEA) safeguards, non-safeguarded nuclear risks receive no automatic treaty reinsurance support from overseas markets," said a senior reinsurance executive. "Insurers either retain the exposure on their own balance sheets or arrange expensive facultative cover."

Limited Options
Global reinsurers such as Munich Re, Swiss Re and SCOR generally do not provide capacity for such risks, leaving insurers dependent on cross-border facultative reinsurers. Since nuclear risks are placed through facultative rather than treaty reinsurance, only a small portion can be retained domestically, with the balance requiring overseas capacity.

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Under India's safeguards agreement with the IAEA, only civilian facilities placed under international safeguards are eligible for inspection and generally attract global reinsurance support. Tarapur units 3 and 4 are not part of the safeguarded facilities listed under the agreement.

As of March 31, 2025, National Insurance, Oriental Insurance and United India Insurance reported negative solvency ratios of -0.67, -1.03 and -0.65, respectively, remaining well below the regulatory minimum of 1.50.

The bidding comes days after the Insurance Regulatory and Development Authority of India (Irdai) advised general insurers to maintain prudent underwriting and sustainable pricing amid intense competition in the property insurance market.