Insurers make biggest aviation insurance payout

Insurers have paid compensation of INR6.6bn ($89m) for an Air India Express plane crash in August. The payout is the largest in Indian aviation market.

Of the total claim provision of $89m, $51m is for the hull total loss and $38mn for liability that may arise for passengers who died or were injured, and baggage loss etc, said Atul Sahai, chairman and managing director of New India Assurance, according to a report by Indian Express.

State-controlled New India Assurance, which leads the Air India insurance account as the lead primary insurer, has paid INRR3.7bn ($51m) as hull claim to Air India, also the highest ever pay-out in the Indian aviation insurance market in this segment arising out of the crash. The majority of claims are funded by a few global reinsurers including GIC Re, which has paid $7m as its share of claim settlement. Besides paying the full hull claim, New India Assurance also paid INR35m for liability as immediate relief to passengers affected.

On 7 August, the ill-fated Air India Express flight from Dubai to Kerala in southern India overshot the runway in one of the worst aviation disasters in Indian history. The aircraft while landing in the night overshot the tabletop runway falling into a valley 35-feet below and broke into pieces, killing 21 people on board, including both pilots, and leaving many others severely injured. There were 190 people on board.

Air India paid a premium of $30m for a sum assured of $10bn for its fleet during 2020-21 renewals that started on 1 April. The total liability under the liability policy taken by the airline company is about $750m. More than 95% of the Air India account is reinsured with the London market and with global reinsurers.

A consortium of the four public sector insurers — New India Assurance, National Insurance, Oriental Insurance and United India Insurance — are the primary insurers of Air India. The share of New India Assurance in the premium and claims is 40% and the balance 60% is shared equally by National Insurance, Oriental Insurance and United India.

Source: Asia Insurance Review