New Delhi, Feb. 1: Indian insurers and reinsurers are likely to discuss the possibility of a cap on earthquake insurance covers on the lines of a similar limit on insurance risks stemming from terror attacks.

The tariff advisory committee, which is scheduled to meet early next week, is expected to take up the issue.

The terrorism pool offers insurance cover against terror attacks up to a maximum of Rs 200 crore per cover. Those who seek a terrorism cover for more than Rs 200 crore are free to go to foreign insurance companies, but the rates from the overseas players are steeper.

With the co-operation of the insurance regulator IRDA and all Indian non-life insurance companies, General Insurance Company (GIC) formed a terrorism pool for the Indian market. The state-owned reinsurer has been appointed as manager of the pool.

“The exposure to earthquake claims is too large and sometimes unquantifiable. In a country like India which has a history of such calamities, it is imperative for the emerging insurance industry to be able to calculate their risk burden. As no one is willing to reinsure 100 per cent of such risks, there is a problem for both the insured and the insurer,” said a senior official of GIC.

With earthquake insurance forming a part of the tariff line business, it is virtually impossible for an insurer to refuse a cover.

“However, when an insurer approaches an overseas reinsurer, they get rebuffed. As a result, the entire burden falls on us,” said the official.

As the issue has been agitating the insurance community, the tariff advisory committee may form an expert committee to study its feasibility.

Former IRDA chairman N. Rangachary had earlier called for the establishment of an insurance pool to combat natural disasters and create a tax-free ‘catastrophe reserve’ for easy availability of finances to meet such contingencies.