MUMBAI: Debt-ridden Air India has got a 20 per cent discount on insurance premium while renewing its annual policy starting October, a senior official said here today.
Air India, whose new policy will begin from October 1, paid a premium of USD 22.5 million during the latest renewal as against USD 27 million in 2014-15, the official said.
The international aviation insurance market, whose losses had mounted last year, has returned to a softer cycle during the current year, which has helped Air India.
Air India has 141 aircraft valued over USD 9.6 billion and had a few claims in 2014-15.
A consortium of four domestic state-owned general insurers led by New India, which already had Air India’s account for 2014-15, has bagged the deal for the next year too, the official said.
It is yet to be decided who among the four state-owned general insurers will get which part of the insurance cover to be provided to Air India for 2015-16.
American Insurance Group (AIG) is the lead reinsurer, while there are 60 global reinsurers including country’s sole reinsurer GIC Re and Swiss Re.
“We are waiting for receiving the final letter from Air India before we internally distribute the risk among the four General Insurance (Public Sector) Association (GIPSA) companies,” a New India official told PTI.
“Even though there was no major claim for the existing year, we did settle claims amounting to around USD 12 million during the year,” he said.
The insurance cover to Air India includes aircraft, war risk and liability risk. Since Air India’s repair facility has become operational from this year at Nagpur, it has also been covered under liability risk this time.
AIG is the lead reinsurer, while there are 60 global reinsurers including the country’s sole reinsurer GIC Re as well as Swiss Re.
Despite some large claims, airlines’ insurance costs globally and for domestic airlines, are likely to fall this year due to competition and better risk management practices, Martin Stevens, the Chief Underwriting Officer at Global Aerospace, which is a unit of AIG had told PTI earlier.
“Despite a rise in volumes in the aviation insurance business in the country, overall premia have fallen since rates have remained soft in global markets.
We do see premia falling further here in the days to come, because there is too much of competition in the market,” Stevens had said.