Mammoth insurance cover for NACIL’s fleet

The $6.5-billion insurance cover for the state-run Air India-Indian combine has been awarded to a public sector insurer’s...

The $6.5-billion insurance cover for the state-run Air India-Indian combine has been awarded to a public sector insurer’s consortium led by the New India Assurance Co Ltd. The cover, which starts today, is likely to be the highest taken by any airline in the Indian sub-continent region.

“We have selected New India Assurance as the insurance provider, which it is doing in league with other public sector insurers,” a senior National Aviation Company of India (NACIL) executive, which runs the merged Air India-Indian, said. “The new insurance cover will be provided to the fleet of the merged entity, Air India Express and Alliance Air, which is about 140 aircraft in total.” This year’s cover is double the exposure that Air India took last year, prior to the merger. The cover last year was valued at $ 3 billion for a fleet of 50 aircraft and was bagged by a consortium led by New India Assurance Co Ltd, with ICICI Lombard General Insurance as co-insurer.

“The cover this year has increased exponentially for two basic reasons: the fleet of the merged entity is obviously much larger and also because we have added new aircraft. Secondly, there has been a hardening of insurance rates and that has increased the value of the coverage.”

According to officials, two consortiums — one consisting of public sector insurers and the other of private sector players — had been in the fray to grab the business this year. Among the private companies that bid for the tender were Bajaj Allianz General Insurance Co Ltd, ICICI Lombard, Cholamandalam MS General Insurance Co Ltd and Reliance General Insurance Co Ltd.

According to reports, NACIL has already managed a 15 per cent discount for its non-aviation business in 2008-09, awarding the contract to ICICI Lombard. The public sector insurers that have won the bid are said to include players like Oriental Insurance and United Insurance. The four public sector insurers dominate aviation insurance business and provide cover to Jet Airways as well as the Kingfisher-Deccan combine.

$6.5 billionThe insurance cover provided to Air India-Indian fleet by New India Assurance Co Ltd this year

$3 billionThe cover provided last year

•The new cover is for a fleet about 140 aircraft. Last year, before the merger, the cover was for 50 aircraft

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•Among the private firms that bid for the tender were Bajaj Allianz General Insurance, ICICI Lombard, Cholamandalam and Reliance General Insurance Company