KARACHI, Sept 13: Growing losses from the fire, that is said to have destroyed about 119,000 bales causing a loss of over Rs800 million in the year 2004, have created a sharp rift between the textile tycoons, ginners and the insurance operators which may eventually force the government to intervene.

The insurance companies have settled the claims of losses in more than 22 cases of fire in godowns, mill premises and in ginneries, because of short circuit and accident during the year 2004. There is only one case of fire at Sadiqabad, estimated to have caused a loss of Rs5 million, which was repudiated by the insurance company.

Issue involved in this dispute was the packaging of pressed cotton bales with fire-proof material and storage which the textile owners said was the responsibility of the ginners. The ginners were demanding Rs100 to Rs150 extra charges for packaging a bale of pressed cotton which the textile owners were not ready to pay. “The insurance industry should take up this issue with the ginners,” a former chairman of All Pakistan Textile Mills Association (Aptma) said.

One of the top leaders of the insurance industry was said to have informed the textile owners and the ginners that the re-insurance companies were now reluctant to offer financial support because of the growing losses from the fire.

“Re-insurance companies are now refusing to provide re-insurance cover if the losses from fire are not controlled,” the leader of the insurance industry was quoted to have said to leaders of the Pakistan Cotton Ginners Association in a meeting held in last week of July in Karachi.

Insurance companies had decided not to increase the premium rate on fire business because, “this is not a lasting solution and our concern is to improve the risk management,” a senior executive of a private insurance company said.

Textile owners and ginners were, however, not ready to buy the argument of insurance industry as they were convinced that there was a cut-throat competition in the insurance industry and there was no option for insurance companies but to give cut on premium rates to stay in the business and that it was their right to enjoy this benefit.

Desperate insurance companies were now seeking the government to intervene into the matter by way of legislation to force the ginners and textile owners comply with what they contended universal safety standards for storing the pressed and unginned bales of cotton in the ginneries and in the warehouse.

A series of meetings have been held at the top level of leadership from textiles, ginners and insurance in last one year but nothing has come out except one industry blaming the other.

A joint working group of insurance companies, textile mills and surveyors held a meeting in April this year which was attended by chairmen of Aptma and the Insurance Association of Pakistan (IAP).

Mr Saifuddin N. Zoomkawala drew the attention of textile leaders towards the heavy losses taking place in open storage of cotton. The insurance companies complained that ginning factories were not observing international standards. The IAP was said to have asked the Aptma in writing to cover cotton bales from six or four sides with cotton or hesian with no loose fibre.

Ginners had also been advised to use a wire of specific measurement so that the packaging of the bale did not break at the time of handling.

Leaders in the insurance, textile and ginning industry are said to be in contact as with the advent of September the cotton season has set in and there are fears of fire outbreak in the selected cotton growing areas.