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Home » India » Reinsurer approves Air India Express’ hull loss: Insurance official

Reinsurer approves Air India Express’ hull loss: Insurance official

According to the official, the lead reinsurer has also estimated the interim liability/claim to be paid for the total loss of the aircraft.

By IANS
Updated on :

By Venkatachari Jagannathan

The lead reinsurer of Air India Express’ insurance account has approved the claim for the total loss of AI Express’ Dubai-Kozhikode aircraft, which crashed in Kozhikode on Friday evening, said a senior industry official.

“Like the consortium of primary insurers, a consortium of reinsurers has insured the aircraft of Air India and its subsidiaries like Air India Express. The lead reinsurer, AIG London, has approved the hull claim (claim for loss of aircraft). Other reinsurers in the consortium will also give their approval,” the senior official with one of the four insurers told IANS preferring anonymity.

A consortium of four public sector insurers — New India Assurance, National Insurance Company Ltd, Oriental Insurance Company Ltd and United India Insurance Company Ltd — has insured the fleet of about 170 aircraft belonging to Air India and its subsidiaries, including Air India Express.

The airline has taken policies covering the aircraft or hull and liability for third party and passengers.

According to the official, the lead reinsurer has also estimated the interim liability/claim to be paid for the total loss of the aircraft.

The official said the loss adjustor has been intimated. Normally the name of the loss adjustor is also part of the reinsurance contract and in this case it is Charles Taylor Adjusting, London.

The ill-fated Boeing aircraft has been insured for $50 million and Air India Express will get the claim amount.

“The aircraft hull insurance is an ‘all risk policy’. The risk explicit risk exclusions define what is covered. Many of the exclusions like war, terrorism risk, and claims deductible can be covered for a premium,” the official said.

As a part of the claims procedure, the insurers/reinsurers will call for documents like the accident investigation report, aircraft maintenance log book and pilot log book, among others.

The official also said that Boeing — the manufacturer of the aircraft — will also be interested in the accident to know the reasons behind the mishap.

It may be recalled that the ill-fated Air India Express skidded off the runway of the Kozhikode airport and fell into a valley before breaking into two pieces, killing 18 persons and leaving scores injured.

As the aircraft is now a total loss, scrap value will be calculated and adjusted against the claim amount.

In the case of passenger liability or compensation to be paid to the passengers or the legal heirs of passengers, a legal team will be there to ascertain the legal position of the claimant.

Passenger liability also covers the baggage value.

The compensation to the passengers will be calculated as per the Montreal Convention.

Industry officials told IANS that the direct claim hit for the consortium of four insurers will be only about 10 per cent of the aircraft value.

The balance value of the risk has been reinsured with Indian reinsurer GIC Re — 5 per cent obligatory cession and 85 per cent with reinsurers with the lead underwriter, AIG, London.

The total premium earned from Air India was about $36 million.

The share of New India in the premium and claims will be 40 per cent and the balance 60 per cent will be shared equally by National Insurance, Oriental Insurance and United India.

According to the official, the total liability under the liability policy taken by Air India is about $750 million. The compensation to be paid to the passengers will be as per the Montreal Convention.

The official said the total commercial aviation insurance market in India with about 510 aircraft will be about $90 million.

“The risk is concentrated on a small base while the value is very high,” the official said.

–IANS

(This story has not been edited by Newsd staff and is auto-generated from a syndicated feed.)
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