New India Assurance loses tag of Air India’s ‘lead insurer’ to Tata firm

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After the Tata group’s takeover of Air India, public sector firm New India Assurance has lost its tag of the airline’s “lead insurer” to a firm from the conglomerate.

New India Assurance had been the lead insurer for the account of Air India for decades. It lost the tag to Tata AIG General insurance — for the first time — during the recent renewal of Air India’s cover for 2023-24, despite significant hardening of the international reinsurance market.

Air India’s renewal premium has remained at $30 million, the same as last year.

“With a good track record, AI has managed to hold on to last year’s premium of $30 million for a policy of $10 billion, though the international aviation market has remained tough owing to the Russian invasion of Ukraine that has affected the aviation reinsurance market badly,” London market sources said.

Like all aviation insurance policies, the Air India policy, with a sum assured of $10 billion, is reinsurance driven and almost 95 per cent of the premium is passed on to global reinsurers who reinsure the cover. Though Tata AIG General Insurance is the lead insurer, the ultimate responsibility of paying any claims lies with the reinsurers.

Led by AIG, a clutch of global reinsurers, including India’s GIC Re, have reinsured the cover which is shared by a consortium of public and private domestic general insurers including New India Assurance, United India Insurance, Oriental Insurance Company and National Insurance Company, Tata AIG General Insurance and ICICI Lombard General Insurance.

The slow-moving Indian aviation insurance market, involving around 700 commercial aircraft, is set to double from Rs 850 crore in 2021-22 soon with Air India and Indigo planning to add more planes in the coming months.

India’s largest airline IndiGo, with 300 aircraft, will go for insurance renewal in July. Whether it will get a friendly response from the international reinsurers like AIG will depend upon the market situation largely driven by the Russia-Ukraine war, insurance sources said. New India is the lead insurer of Indigo in FY 2022-23.

During the 2023-24 renewals, Air India added a few aircraft on lease and the sum assured of the policy is back to $10 billion. The fleet includes 140 aircraft of AI and 26 narrow body aircraft of Air India Express. Air India operates a mixed fleet of Airbus and Boeing planes, including B777-200LR, B777-300ER, B787-800 Dreamliner, A319, A320, A320neo and A321 jets serving 102 domestic and international destinations.

Earlier, Air India had announced that it would acquire 470 new aircrafts over next couple of years from Airbus and Boeing, including 260 wide body planes, the largest order ever from any Indian airline and among the largest globally.

During 2022-23 renewals, which had happened soon after Tatas took over AI from the government, Tata AIG General Insurance, a joint venture between Tatas and US based AIG, for the first time had got a 30 per cent share in AI’s cover while NIA had retained its existing share of 40 per cent.

In a bid to check surging premium, amidst hardening of global aviation insurance market, Tata group, had reduced the overall size of its cover, sum assured, by $ 2 billion to $8 billion and managed to renew AI’s cover for FY 2022-23 by paying a premium of $ 35 million as compared to $34 million in 2021-22. Finally, in FY 2022-23 AI had paid $ 30 million as premium in four instalments after availing discounts.





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