New India Assurance loses tag of Air India’s ‘lead insurer’ to Tata firm

05/12/2023

New Delhi, May 12: After the Tata Group's acquisition of Air India, the public sector firm New India Assurance has lost its title as the airline's "lead insurer," with the title now transferred to an insurance firm within the conglomerate. 

The public company had been the leading insurer of Air India for decades, but Tata AIG General Insurance firm has taken over during the latest renewal of Air India's cover for 2023-24, despite major hardening of the international reinsurance market. 

Although the insurance firm has changed, the airline's renewal premium remains the same at USD 30 million, the same as last year. 

According to sources familiar with the matter, AI's good track record has helped it hold onto the same premium of USD 30 million for a policy of USD 10 billion, despite the international aviation market being tough due to the Russian invasion of Ukraine, which has badly hit the aviation reinsurance market. 

Similar to all aviation insurance policies, AI's policy, with an assured sum of USD ten billion, is reinsurance-driven, meaning that almost 95 per cent of the premium is transferred to global insurers who reinsure the cover. Therefore, even though Tata AIG General Insurance is the lead insurer, the ultimate responsibility of paying for claims lies with reinsurers. 

AIG leads a consortium of both public and private domestic general insurers, including the likes of General Insurance Corporate of India, New India Assurance, United India Assurance, National Insurance Company, Oriental Insurance Company, ICICI Lombard General Insurance and Tata AIG General Insurance. 

With the uptick in new aircraft inductions from the likes of Air India and IndiGo, the Indian aviation market, which currently constitutes about 700 commercial aircraft, will double from Rs 850 crore in 2021-22. 

IndiGo, India's largest airline, with a fleet of 300 aircraft, is set to go for insurance renewal in July. Whether the airline will receive a favourable response remains to be seen, given the ongoing Russia-Ukraine war. New India Assurance also holds the title of "lead insurer" for IndiGo.-Agencies

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