GAIL's new LNG insurance cover
One of India's leading marine insurance providers, IFFCO-Tokio, has won a lucrative one-year contract from GAIL to provide coverage for LNG cargoes.
On September 10 (2024), GAIL awarded the contract to IFFCO-Tokio, which became effective on September 17 (2024) and ends on September 16 (2025). GAIL will pay a yearly premium of Rs1.92cr ($229,140), which includes four different annual premiums.
Four other insurance companies responded to GAIL's tender floated on July 3 (2024) with a July 24 (2024) bid deadline: Bajaj Allianz, ICICI Lombard, Tata AIG and state-owned New India Assurance Company. Tata AIG was disqualified after GAIL evaluated technical bids.
When GAIL opened price bids, IFFCO-Tokio bid lowest at Rs1.92cr while New India Assurance came second with Rs1.99cr ($238,700), ICICI Lombard was third with Rs2.08cr ($238,700) and Bajaj Allianz was far behind in fourth place, bidding Rs2.41cr ($287,650). GAIL's contract is divided into two.
Under the first category, GAIL wants insurance coverage in three different parts. In Part I, IFFCO-Tokio will provide cover for LNG sales in international waters, including LNG transactions like FOB sales, time swaps, and destination swap sales.
For this cover, GAIL will pay a yearly premium of Rs44.53 lakhs ($52,150). Under Part-2, GAIL wants cover for LNG transported through tankers it has hired, along with LNG shipments on Q-Flex ships from Qatar.
GAIL will pay a premium of Rs36.34 lakhs ($43,380). Part-3 insurance covers the shipment of all GAIL cargo worldwide with a yearly premium of Rs52.93 lakhs ($63,180).
Under the second category, GAIL wants marine insurance for war, strikes, riots, and disruption in the Persian Gulf area. GAIL will pay a yearly premium of Rs58.92lakhs ($70,340).
Set up in 2000, IFFCO-Tokio is a joint venture between the Indian Farmers Fertilisers Cooperative (IFFCO), which holds 51% and the Tokio Marine Group (49%). "IFFCO is the world's biggest fertiliser manufacturer, and the Tokio Marine Group is one of the biggest insurance groups in Japan," says the company website.