Air India’s entire fleet of 170 planes (including Air India, Air India Express and Alliance Air aircraft) is insured for close to $10 billion and the airline also has liability cover of $750 million
Air India Express’ Boeing 737 aircraft, which crashed in Kozhikode, Kerala on August 7 was insured for $50 million.
Air India’s entire fleet of 170 planes (including Air India, Air India Express(AIE) and Alliance Air aircraft) is insured for close to $10 billion and the airline also has liability cover of $750 million, underwritten by four public sector insurance companies, says a report by Business Standard.
Moneycontrol could not independently verify the report.
The carrier had renewed the policy in April 2020 on annual premium of $30 million, they added. Insurance policy secures an airline from loss of assets (plane, engine, spares), while liability cover protects against third-party claims.
One public sector insurance executive told the paper that the claim settlement for the damaged AIE plane would depend on hull value and liability. “The prices will harden in the international market. At the same time, carriers are facing liquidity crises. The reinsurer’s price, too, will move up. The insurers may also have to push up rates, as prices are driven by reinsurers,” they said.
Air India is expected to get full insured amount for the aircraft’s hull loss, it is also expected to pay compensation to kin of deceased and those injured from liability cover.
A GIC official said liability is “not a worry” for GIC as it has “full protection” against aviation risks. “The maximum net loss to GIC will not be above $8.5 million. Any amount beyond the above-mentioned figure will be recovered from foreign reinsurers. It’s still early days for a total loss assessment,” they added. The GIC official also agreed that rates of aviation risk will harden.The airline said it would pay compensation “in accordance with the applicable laws at the appropriate juncture.”