Leading Indian airline Air India is being courted by insurers looking to cover its massive new fleet. The airliner recently announced orders of 470 planes with Boeing and Airbus, and its position as part of the Tata Group gives Air India a prime position for negotiation.
With the airline spending millions every year for insurance coverage of its aircraft, it finds itself with multiple options for the next financial year.
According to a report, several Europe-based multinational companies met Air India’s officials in London recently to discuss the structure of the insurance deals. With nearly 500 planes at stake, there’s no shortage of insurers looking to close the multimillion-dollar deal.
Tata AIG General Insurance is one of the bigger names looking to seal the contract. Other insurers of note include The New India Assurance Company, Oriental Insurance Company, United India Insurance, and National Insurance Company.
Besides its current position with the Tata Group, Air India’s close association with Singapore Airlines has also put it in a better position this year to negotiate the terms of its aircraft insurance. It is likely that Air India will explore and exhaust all options to get the best deal possible for its nearly 500 aircraft.
The insurance of airplane fleets for various airlines can cost in the millions. Of note was last year’s coverage for Air India’s 117 aircraft and Air India Express’ 24, which came to around IN₹3 billion, or US$36 million. US$24 million of this cost was for the Air India fleet alone.
The disruption of several global factors has raised the premium for aircraft insurance, most notably the ongoing conflict between Russia and Ukraine. Air India’s insurance premium was decided last year following negotiations by the new management in India and London.
The resulting coverage for the Air India fleet was US$8 billion for its planes, although the premium it paid was slightly more than the $31 million it paid in 2021. As for what the premiums will be in the current year, it’s one that should be finalized for the next financial year.
Last year, Tata AIG received a 30% share in the coverage, while New India Assurance took 40%. It’s worth noting that Indian insurance companies retain only 5% of the premium and pass on the rest to foreign insurers to keep their books risk-free.
Delivery of Air India’s new planes is set to begin this year, in addition to several others that will arrive on short-term leases.
In other Indian insurance business happenings, Future Generali India Life Insurance recently appointed Reena Tyagi as its new chief human resource officer.
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