Air India to fork out 15% higher insurance premium
23 August 2011
Mumbai: A lack of faith in its operational efficiencies, combined with stiff tender terms will result in Air India forking out 15 per cent more for its annual insurance policy. The policy comes up for renewal on 1 October.
For the coming year the outgoing for AI will be Rs160 crore, as against Rs136 crore last year.
Interestingly, AI will be paying a higher premium despite the fact the period 2010-11 was a 'no claims' period and there was no change in the fleet size.
Reinsurance brokers say the government carrier had itself to blame for higher premiums, as these are a result of inefficient management and business operations.
Air India's fleet is valued at $9.1 billion.
While ICICI Lombard General Insurance Co has been the lead insurer, the share of four government-owned general insurers amounts to 40 per cent of the premium.
Air India's falling appeal amongst insurers can be gauged from the fact that unlike last year, when all major private players and a consortium of public sector insurers participated in the Air India tender, only two bids were made this year.
Between 85-90 per cent of aviation policies in India are reinsured with foreign reinsurance companies.