In a significant transition, Tata AIG General Insurance has replaced New India Assurance as the lead insurer of Air India, following the Tata Group’s acquisition of the airline. New India Assurance has held this position for decades, but a change was initiated with the renewal of Air India’s 2023-24 policy.
Air India has managed to sustain its $30 million premium from the previous year for a $10 billion policy, despite the international reinsurance market facing major challenges due to the geopolitical crisis in Ukraine. According to industry insiders, the airline’s commendable track record played a significant role in this achievement.
Almost 95% of the premium from Air India’s policy, which assures a sum of $10 billion, is transferred to global reinsurers. These reinsurers are the ones ultimately bearing the responsibility for any claim settlements, despite Tata AIG General Insurance being the principal insurer.
A consortium of global reinsurers, led by AIG and including India’s GIC Re, is backing the policy. The cover is shared among several domestic public and private insurers such as New India Assurance, United India Insurance, Oriental Insurance Company, National Insurance Company, Tata AIG General Insurance, and ICICI Lombard General Insurance.
The aviation insurance market in India, which currently encompasses about 700 commercial aircraft, is projected to double from Rs 850 crore in 2021-22. This growth is expected as airlines like Air India and IndiGo are planning to expand their fleets. The future insurance renewal response for IndiGo, India’s largest airline, will largely depend on the international market situation influenced by the Russia-Ukraine conflict.
Air India, during the 2023-24 policy renewal, increased its coverage back to $10 billion by adding leased aircraft to its fleet. The fleet includes a mix of Airbus and Boeing planes serving 102 domestic and international locations.
In an earlier announcement, Air India unveiled plans to acquire 470 new aircraft from Airbus and Boeing over the next few years. The order, including 260 wide body planes, represents the largest from an Indian airline and one of the largest globally.
The Tata Group, during the 2022-23 policy renewal, managed to renew Air India’s cover by reducing the sum assured from $10 billion to $8 billion, effectively controlling the escalating premium amidst a hardened global aviation insurance market. Consequently, Air India paid a premium of $30 million in four instalments after availing discounts.
This news is based on an article from indianexpress.com.
