General Insurance Corporation (the Indian state owned insurance and reinsurance company) is working to establish a natural catastrophe pool for insurers and reinsurers in Africa and Asia. A top official at the company has been quuoted in the Deccan Herald saying that GIC have been entrusted by the Federation of Afro-Asian Insurers and Reinsurers (FAIR) to set up a catastrophe pool which can be utilised by local re/insurers.
The pool is said to be called the FAIR Natural Catastrophe Pool and GIC have been given the task of creating and managing the facility. The pool will be available to members in the event of natural catastrophes such as earthquakes, windstorms or tsunamis which have a sizeable impact on the economy or insurance market.
They say it will take another 9 to 12 months to have the facility up and running and are aiming to offer capacity by January 2011. They now plan to approach members of FAIR to gauge interest and establish how many local re/insurers they can convince to join the facility. Overall size of the facility will depend on the amount of members they can convince to sign up.
It will be interesting to see how this initiative fairs and whether it is well received. Right now it seems like this region may be better served by a facility which could offer index-based cover in a similar manner to the Caribbean Catastrophe Risk Insurance Facility.