The material cost of the terror attacks on Mumbai's Taj and Trident Oberoi hotels has been a mystery till now. Insurance value, costs, and losses are all guesstimates, with different figures trying to explain exactly how much the damage will cost to repair.

Even as appraisers try and quantify the losses at the Taj and Trident-Oberoi, terror insurance is now on the mind of many a business entity. Coverage under terror insurance can be accorded for loss of or damage to property, and also for losses on account of consequential business interruption.

The General Insurance Company (GIC) has a pool of Rs1,200 crore to manage, mandated by the Insurance Regulatory and Development Authority (IRDA).

The India Market Terrorism Pool (IMTP) was set up in 2002 with Rs200 crore after the attacks on the World Trade Centre (WTC) in New York. Residual amounts left with the general insurance companies operating in India is deposited into this pool, which covers companies and institutions for a liability of Rs750 crore, including material or property loss or damage and also business interruption losses.

Larger companies needed more coverage head to the international market to insure their property though a competitive bidding process.

Media reports suggest that the the Taj Hotel was insured for over Rs1,000 crore, being one of 2.5 lakh companies or institutions covered by terror insurance from the pool. They also suggested that till now, claims totalled just around Rs15 crore. Terror insurance coverage is usually on the re-insurer's terms and premiums, which vary according to an analysis and perception of the proposed risk.

Following the terror attacks on Mumbai hotels, premiums for terror insurance policies are set to escalate, reports said. IRDA officials are reported to have met in Hyderabad to thrash out the details about revising insurance rates for providing terrorism cover.

Insurance officials fear that if the spate of terror attacks continue unabated as they have this year, the pool of Rs1,200-crore could be wiped out within the next few occurrences. Around 12 public and private sector insurance companies that provide terrorism insurance cover as an add-on cover to the regular fire insurance policy.

Premiums for terrorism cover were around Rs0.21 per Rs1,000 of the total sum insured, and would most likely be revised soon in the wake of the Mumbai attacks. Reports suggest that premiums could go up by 50 per cent or more, and the IRDA was reported to being urged to consider approving a proposal that will allow terrorism cover to be sold as a stand-alone policy.

Other reports estimated the total losses at the Taj and Trident-Oberoi hotels at around Rs800 crore, with estimates of annual premiums paid by establishments across the city to cover against terrorism at around Rs50-60 crore. Other than the Taj and Oberoi hotels, Air India, Bombay Stock Exchange, Pancharatna at Opera House, World Trade Center at Cuffe Parade, and places of worship like Swaminarayan and Siddhivinayak temples were reported to be insured against terror attacks.