The areas of exclusion were decided after joint discussions between the organisations during July and August, following which GIC issued the final guidelines for the sake of uniformity. The risk of large claims and litigation arising out of the Y2K menace is infinitely higher in the case of non-life insurance, and has been globally estimated at US$ 1 trillion, although sections of the global populace have been viewing it as mere hype.

The first annexure that comes with each policy contains an electronic date recognition clause which says that the insurance policy does not cover loss, injury or damage caused by anomalies of data brought about by a date change in any computer system, hardware, software orprogramme, non-use of any property or equipment arising out of Y2K, or inability of any advice, consultation, rectification or repair to determine potential or actual failure of any of the above. Broadly speaking, the exclusion clause covers a wide range of accidents (arising out of bug problems) such as those involving cash in transit, product liability, professional indemnity, jewellers' block insurance, plantation insurance, not to mention fire engineering, cargo, aviation, etc.

But what is even more interesting is the departure from the earlier mood of reluctance in the industry to grant cover exclusively on Y2K risk. The feeling now is that Y2K insurance may yet turn out to be good -- if not big -- business even in India and insuring cases where total compliance has been satisfactorily established may make sense. Senior officials from all the five organisations do concede this, although they are waiting for the overtures to come from corporates before they can take decisions on which cases to coverand the basis for premia to be fixed.

A senior GIC official points out that the first part of all insurance policies will be the comprehensive exclusion clause. Should companies still want Y2K cover--to be given at the discretion of the insurers -- two preconditions wil be insisted on for granting cover: a certification from a competent authority such as a well-known IT firm like Infosys, Tata Consultancy or others certifying compliance and the filling up of a pre-set questionnaire giving details about compliance.

Broadly speaking, the questionnaire asks for information such as about the awareness of the problem in relation to manufacturing facilities, targetted dates for compliance, emergency plan for electronic failures, availability of key personnel at all times, exposed areas and above all, whether the issue has been discussed with top management, risk managers, group companies software and hardware suppliers, data suppliers, sub-contractors and clients and buyers of products. It is only when thesepre-conditions are met that insurance companies will decide whether to offer cover or not. The idea is to offer cover at a higher premium if loss occurs in spite of the insured's best attempts to make systems Y2K compliant.

Personal insurances like those on personal accident, mediclaim (claims arising out of failure of medical equipment), rural insurance, motor, and inland transit (this is non-automated) will fall outside the purview of the exclusion clauses and continue to enjoy the usual cover without any extra premium, even if accidents occur on account of the bug.