MUMBAI: Despite a challenging reinsurance market, Air India is likely to renew its $10 billion fleet insurance program next week without significant premium increases. Since the invasion of Ukraine, aviation insurance war rates have doubled. But "hull" insurance rates, which make up the majority of premiums, haven't gone up yet because insurers haven't decided if the 400 aircraft Russia took from leasing companies are theft or an act of war.
In a tit-for-tat response to Western sanctions and asset freezes, Russia banned airlines from returning planes to their owners, resulting in the loss of 400 planes worth $10 billion to aircraft lessors. Because insurers offer low limits for war insurance, the claim impact would be minimal in the event that the loss is determined to be an act of war. In any case, on the off chance that not entirely set in stone to be robbery, the cases will negatively affect the reinsurance business and prompt rates to increase further.
As aviation underwriters view the Tata ownership positively, Air India is in a sweet spot with a renewal due next week. Last year, the premium was $35 million for its $10-billion armada. The renewal premium should remain roughly the same, according to insurers.
Reinsurers reported that the cost of war insurance has increased by a factor of two, but this increase only amounts to about 5% to 10% of the total premium.
After the crash in Kerala three years ago, Air India has not experienced any significant problems. The new administration has likewise exhibited better capacities in support of airplane," said a reinsurance official.
The good news is that there has not yet been a payment, so underwriting capacity has not been affected. However, multi-billion-dollar product liability claims against Boeing continue to impact the aviation insurance market and investments in European markets," the official continued.