[ad_1]
MUMBAI: Air India is likely to get its $10-billion fleet insurance programme renewed next week without a major increase in premium despite a hard reinsurance market. War rates for aviation insurance have doubled since the Ukraine invasion. But ‘hull’ insurance rates, which form the bulk of the premium, have not yet increased as insurers are yet to decide on whether the 400 aircraft confiscated by Russia from leasing cos are theft or an act of war.
Aircraft lessors have lost 400 planes valued at $10 billion after Russia banned airlines from returning planes to their owners in a tit for tat response to the sanctions and freezing of Russian assets by the West. In case the loss is determined to be an act of war, the claim impact would be low as insurers provide low limits for war insurance. However, if it is determined to be theft, the claims will take a heavy toll on the reinsurance industry and cause rates to rise further.
Air India, which has a renewal due next week, is in a sweet spot as aviation underwriters are viewing the Tata ownership positively. Last year, the premium was $35 million for its $10-billion fleet. Insurers expect the renewal premium to be around the same level.
Reinsurers said that war insurance rates have doubled but it is still around 10% of the total premium and overall rates will go up by only 5-10%.
Air India has not had any major incident after the Kerala crash three years ago. “The new management has also demonstrated better capabilities in maintenance of aircraft,” said a reinsurance official.
“The good part is that underwriting capacity has not been hit as there has been no payout yet. But the aviation insurance market is still hurting from multi-billion product liability claims in Boeing and hit on investments in European markets,” the official added.
Aircraft lessors have lost 400 planes valued at $10 billion after Russia banned airlines from returning planes to their owners in a tit for tat response to the sanctions and freezing of Russian assets by the West. In case the loss is determined to be an act of war, the claim impact would be low as insurers provide low limits for war insurance. However, if it is determined to be theft, the claims will take a heavy toll on the reinsurance industry and cause rates to rise further.
Air India, which has a renewal due next week, is in a sweet spot as aviation underwriters are viewing the Tata ownership positively. Last year, the premium was $35 million for its $10-billion fleet. Insurers expect the renewal premium to be around the same level.
Reinsurers said that war insurance rates have doubled but it is still around 10% of the total premium and overall rates will go up by only 5-10%.
Air India has not had any major incident after the Kerala crash three years ago. “The new management has also demonstrated better capabilities in maintenance of aircraft,” said a reinsurance official.
“The good part is that underwriting capacity has not been hit as there has been no payout yet. But the aviation insurance market is still hurting from multi-billion product liability claims in Boeing and hit on investments in European markets,” the official added.
[ad_2]
Source link