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

By Nagasunder in Business News, posted May 12, 2023

Tata AIG General Insurance has taken over as the lead insurer for Air India, replacing New India Assurance, following the Tata Group's acquisition of the airline.

This is the first time that Tata AIG has taken on the role, having secured the account during the renewal of Air India's cover for 2023-24.

Despite the hardening of the international reinsurance market, the renewal premium has remained the same as the previous year at $30 million.

The Air India policy, with a sum assured of $ 10 billion, is reinsurance-driven and almost 95 percent of the premium is passed on to global reinsurers, with ultimate responsibility for claims lying with the reinsurers.

The cover is shared by a consortium of public and private domestic general insurers including New India Assurance, United India Insurance, Oriental Insurance Company, and National Insurance Company, Tata AIG General Insurance, and ICICI Lombard General Insurance.

India's aviation insurance market, which involves around 700 commercial aircraft, is set to double from INR8.5 billion ($ 114.5 million) in 2021-22 soon, with Air India and Indigo planning to add more planes in the coming months.

Indigo, India's largest airline, with 300 aircraft, will go for insurance renewal in July.

Whether it will get a friendly response from international reinsurers like AIG will depend on the market situation, largely driven by the Russia-Ukraine war, according to insurance sources.

During the 2023-24 renewals, Air India added a few aircraft on lease and the sum assured of the policy is back to $10bn.

The fleet includes 140 aircraft of AI and 26 narrow-body aircraft of Air India Express, with Air India operating a mixed fleet of Airbus and Boeing planes, including B777-200LR, B777-300ER, B787-800 Dreamliner, A319, A320, A320neo, and A321 jets serving 102 domestic and international destinations.

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During the 2022-23 renewals, Tata AIG General Insurance secured a 30 percent share in Air India's cover, while New India Assurance retained its existing 40 percent share after Tatas took over AI from the government.

In a bid to check the surging premium amidst the hardening of the global aviation insurance market, the Tata Group reduced the overall size of its cover, sum assured, by $ 2 billion to $ 8 billion.

It managed to renew Air India's cover for FY 2022-23 by paying a premium of $35m compared to $34m in 2021-22.

Finally, in FY 2022-23, Air India paid $30 million as the premium in four instalments after availing discounts.

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