Global reinsurers will have to shell out over 90 per cent of the insured value of the Air India plane that was destroyed in the accident at the Kozhikode airport, with the public sector Indian insurance consortium led by New India Assurance – which reinsured the risk abroad – not getting affected much. Air India, which has 170 aircraft, has taken an insurance policy that includes aircraft or hull and liability for third party and passengers. Air India Express’s aircraft is reinsured for around Rs 375 crore and Air India will recover this amount from reinsurers as the plane has been totally damaged. This will be one of Air India’s largest insurance claims. Air India had paid around $30 million for the renewal on April 1. The airline has taken policies covering the aircraft or hull and liability for third party and passengers. It has to also pay the passengers who have died and have been injured from insurance claims. New India-led consortium retained just 5 per cent and the balance value of the risk has been reinsured with Indian reinsurer GIC Re – 5 per cent obligatory cession – and 90 per cent with global reinsurers with the lead underwriter being AIG. Industry participants say, in this case, total loss claim settlement will take place as the plane can’t be repaired. Sources said the survey exercise for the insurance claim settlement has already started. While the cost of the Boeing 737 ranges from $90 million to $134 million, the insured value of the ill-fated 737 Air India Express plane would be around half of the original cost or even less than that – or $ 45-55 million – after considering the depreciation, insurance sources said. “Reinsurers will consider the claim after taking into account all the details relating to the accident,” they said. Air India is purely a reinsurance-driven account and almost over 95 per cent of the cover is reinsured in the London market. GIC gets the mandatory 5 per cent of the reinsurance as per the government regulations. GIC has not yet divulged its share in the Air India insurance deal. Air India’s insurance renewal cost had almost doubled to around $28 million for the year 2018-19 as a host of adverse factors including the crash of an Ethiopian Airlines aircraft put an end to the days of discounts in the segment. Air India has reportedly paid over $30 million premium in 2020. “Aviation insurance is a global product and the trend on product and premium is mostly controlled by global reinsurance majors. Since, the trend over the last five years after the Malaysian airlines crash in 2014 has been largely stable, the Kozhikode incident is unlikely to lead to a spike in premiums,” said a senior official with a general insurance company.
- Express Group acquires insurance web aggregator My Insurance Club
- Gujarat exits PM crop insurance scheme