KARACHI, June 4: The state-run National Insurance Company Limited (NICL) in a major initiative has started offering a terrorism risk cover on protection of lives and property of tourists and foreign investors and has also increased the compensation from Rs200 million to Rs600 million.

“These insurance policies are being offered at a very low cost despite the fact that Pakistan has been placed in the category of countries that are considered high risk,” a senior executive of the company told Dawn.

A few energy companies in Pakistan subscribed to the terrorism risk cover of Rs200 million property losses. “The business underwritten by the NICL to cover terrorism risk for property has been almost claim free for last three years,” the senior executive disclosed and added that international insurance operators have placed Pakistan in category of countries like Afghanistan, Chechnya, Iran, Iraq, Israel, Kuwait, North Korea for which a special tariff has been proposed for insurance business.

Now all tourists, members of business and professional teams, consultants and other foreigners on a short visit to Pakistan, for a week to a month, are being offered three types of travel insurance that cover compensation in event of death or disability from $100,000 to $300,000. For a week the cost ranges from $50 to $150 and for a month $150 to $350.

The NICL is making arrangements with Pakistan’s missions abroad and setting up counters at immigration at Pakistan airports besides giving a policy form to the foreigners.

“NICL have tailored a very comprehensive coverage so that you are fully protected from any unforeseen mishap during your visit to Pakistan,” announces the official brochure which declares the travel insurance including terrorism cover is low-cost, stand-alone and self-contained.

The NICL and many other local insurance companies before 9/11 attacks were offering coverage on terrorism risk under fire and property insurance and against riots and strike. Terrorism risk was covered without any additional cost before 9/11. At that time the risk was also acceptable in local and international market.

But after 9/11, the international re-insurers withdrew the terrorism risk coverage from fire and property treaties from all those countries which were declared high risk areas and that include Pakistan. Later a few private companies did initiate terrorism coverage with a very modest level of Rs5 million to Rs10 million.

After 9/11 when international reinsurance companies withdrew their support for covering terrorism risk, the government proposed the setting up of a pool by the Pakistani insurance companies. But the companies found the proposal unviable and it fizzled out.

According to insurance business sources the foreign reinsurance companies were now indicating to share terrorism risks with Pakistani insurance companies but at very high premium rates. “The rates are so high that investors consider subscription of these insurance policies too costly and prefer to operate without any such cover. The NICL has proposed the new revised scheme for terrorism cover at reduced rate”.

Unlike many other countries where bomb blasts destroyed property and business worth billions of dollars and loss of lives running in to hundreds, Pakistan, the insurance business sources say, has been fortunate enough not to witness such incidents. There have been target killings, sectarian blasts, ethnic riots and incidents like Bohri Bazar bomb blasts in 1987, bomb explosions in bazaars of Quetta, Peshawar and a few other towns but not of the magnitude of 9/11, Nairobi, London and other places.