Jaipur fire brings insurance windfall for IOC
Mumbai   05-Oct-2010

IndianOil, has settled an insurance claim of Rs 177 crore (Rs 17.7 million) with ICICI Lombard for the devastating fire at the Indian Oil depot in Jaipur in October last year.

The fire at the IOC storage facility at Sitapura, about 18 km from Jaipur, claimed 12 lives and over 150 persons were injured. The fire broke out after 50,000 kilo litres of fuel, mostly diesel, caught fire due to a pipeline leak at one of the tanks. The estimated loss at the storage facility was over Rs 250 crore. It took more than a week to douse the fire. One of the oil tanks caught fire and then it spread rapidly. There were huge flames as high as 70 feet and an area of nearly 2- 3 kilometres was engulfed in fire and flames.

"The entire property at the storage facility was insured for a total sum of Rs 210 crores. With majority of the property damaged, we have settled for an insurance payout of Rs 177 crore" said a senior official with the IOC on Tuesday.

The IOC paid Rs 10 lakh each to the dead, Rs two lakh to those seriously injured and Rs one lakh to those with minor injuries.

ICICI Lombard paid out Rs 177 crores for itself as well as its co- insurers for the account. ICICI Lombard held 50 percent of the account, followed by Oriental Insurance at 25 percent, Iffco Tokio at 15 percent and National Insurance at 10 percent. Both Oriental and National Insurance are owned by the Union Government. According to a senior IOC official, ICICI was the lead insurer and there was a set of coinsurers also. He said when an account is insured through co- insurance, the insurer shares the premium in proportion to his share of the account and the claims are also settled in the same ratio. But ICICI Lombard paid the claim first as the lead insurer.

The official said the IOC account was adequately reinsured with GIC- RE being the lead insurer. But ICICI Lombard, as the main lead insurer, paid out the entire claim. The co- insurer Oriental Iifco Tokio and National Insurance would pay the ICICI Lombard the balance amount as their share of liability. ICICI Lombard shelled out Rs 50 crores first and the remaining Rs 127 crores was paid recently, added the official.

Nine IndianOil (IOC) officials, including General Manager Gautam Ghosh, were arrested for criminal negligence that caused the huge fire. They were also released on bail. A high-powered committee that probed the incident, in its report, had blamed the officials for the mishap.