With a good track record, AI has managed to hold on to the last year premium of $30 million

After a year of ownership of Air India, Tatas have preferred to make their own subsidiary Tata AIG General insurance as the lead insurer for the airlines by giving larger shares insurance cover to the company over NIA.

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 NIA, United India Insurance(UII), Oriental Insurance Company(OIC) and National Insurance Company(NIC),Tata AIG General Insurance and  ICICI Lombard General Insurance

London/Mumbai:

Though, premium of Air India’s(AI) renewal has remained at $30 million, same as the last year, despite significant hardening of international reinsurance market, state owned New India Assurance, “the lead insurer for the account” for decades, has for the first time lost the tag to Tata AIG General insurance during the renewal of the AI cover on Apr 1.

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

After a year of ownership of Air India, Tatas have preferred to make  their own subsidiary Tata AIG General insurance as the lead insurer for the airlines by giving larger shares of insurance cover to the company over NIA.

Like all aviation insurance policies, AI policy, with a sum assured of $10 billion, is reinsurance driven and almost 95 per cent pf premium is passed on to global reinsurers who reinsurer the cover and though Tata AIG General Insurance is the lead insurer, the ultimate responsibility of paying ing any claims lie 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 NIA, United India Insurance(UII), Oriental Insurance Company(OIC) and National Insurance Company(NIC),Tata AIG General Insurance and  ICICI Lombard General Insurance.

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.

However, during the latest renewal completed on 31st March, Tatas have given slightly higher share to Tata Aig General Insurance over NIA.

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.

Tata Group, after acquiring AI from the Indian government, had preferred to reduce the value of a few old aircraft thereby bringing down overall size of the renewal cover for a fleet of 141 aircraft from $10 billion to $8 billion.

In 2023-24 renewals, AI has 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, AI 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.

With IndiGo, which has more than 300 planes in its fleet currently also adding 500 additional aircraft in the next few years, slow moving Indian aviation insurance market, with around 700 commercial airplanes, is set to double from Rs 850 crore in 2021-22 soon.

India’s largest airline IndiGo, with 300 aircraft, will go for insurance renewal in July and, whether it will get a friendly response from the international reinsurers like AI will depend upon the market situation largely driven by Russia-Ukraine war, said analysts.