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Ashwini Phadnis

Private insurers falter yet again at tech evaluation stage

New Delhi , June 28

Private sector insurance companies have failed yet again to bag the insurance cover for Air India, which will pay a premium of $15 million for insuring its fleet during the current year. A consortium of public sector insurance companies, led by New India Insurance, has got the contract.

The insurance payout this year is more that the $13.9-million paid last year mainly due to an expected increase in the number of passengers flown and number of aircraft in the fleet, sources said.

"The airline has managed to negotiate a 15-16 per cent discount in the lead rate. However, it is expected that the premium payout for getting an insurance cover for Air India and Air India Express would be around $15 million," official sources told Business Line.

The private sector insurance companies that were in the race to be appointed insurers to AI could not cross the technical evaluation stage, sources added.

"The private sector companies were unable to meet the technical qualification on net worth, claim settlement and some even for their knowledge of the aviation sector," sources said.

The private sector companies in the fray were IFFCO-Tokio, Reliance General Insurance and ICICI-Bajaj.

The current insurance cover has estimated that the average fleet value would increase to $4 billion from $2.8 billion during the previous year. The AI insurance cycle runs from July 1 to June 30.

This year the airline has sought an insurance cover for over five million passengers and an aircraft fleet of more than 50, up from 44 aircraft last year.

The airline has also taken an insurance cover for the six new Boeing 737-800 aircraft that are scheduled to join Air India Express fleet during the year and for the five new Boeing 777 aircraft that are scheduled to join the Air India fleet as per the original delivery schedule drawn up with the aircraft manufacturer, sources said.

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