Nuclear Power Corp of India (NPCIL) had budgeted ₹30.13 crore, including taxes, for insuring Tarapur units 3 and 4 under a one-year property damage programme, according to sources cited by The Economic Times. However, the reverse auction for covering the risk saw bids fall dramatically, with Oriental Insurance quoting ₹10 crore, United India Insurance ₹10.98 crore, and New India Assurance ₹28.9 crore. The insurance programme covers assets worth about ₹7,500 crore with a loss limit of around ₹3,000 crore, as reported by people familiar with the matter. This risk was placed for around ₹30-40 crore in the previous years, highlighting the significant reduction in premium pricing.
The sharply lower bids than what the state-run nuclear power utility had earmarked have put the lens on underwriting discipline in the loss-making general insurance sector, as reported by The Economic Times. Three state-run companies reported negative solvency ratios as recently as FY25, with Oriental Insurance and United India Insurance both having solvency ratios significantly below the regulatory minimum. As of March 31, 2025, National Insurance, Oriental Insurance and United India Insurance reported negative solvency ratios of -0.67, -1.03 and -0.65, respectively, remaining well below the regulatory minimum of 1.50.
According to sources cited by The Economic Times, Oriental Insurance and United India Insurance, both with solvency ratios significantly below the regulatory minimum, have undercut each other to win the nuclear insurance contract. The bids to cover the unusual risks dropped to nearly a third of the budgeted premium, highlighting the competitive pressure in the general insurance sector. Industry executives noted that the aggressive pricing is particularly striking because the risk relates to a non-safeguarded nuclear facility, where global reinsurance capacity is extremely limited. Unlike civilian nuclear facilities covered under International Atomic Energy Agency (IAEA) safeguards, non-safeguarded nuclear risks receive no automatic treaty reinsurance support from overseas markets, forcing insurers to either retain exposure on their own balance sheets or arrange expensive facultative cover.
The bidding comes days after the Insurance Regulatory and Development Authority of India (Irdai) advised general insurers to maintain prudent underwriting and sustainable pricing amid intense competition in the property insurance market, as reported by The Economic Times. Individual insurers did not respond to queries on the subject while NPCIL officials could not be reached for comments. The regulatory guidance comes at a time when the general insurance sector faces significant underwriting discipline challenges, with state-run insurers continuing to compete aggressively despite their weak financial positions.
