Introduction
Air India has successfully locked in a $20 billion insurance policy for its expanded fleet after merging with Vistara. Despite the increase in the sum insured, the airline has managed to maintain its existing premium rates, securing a significant financial advantage.
Key Highlights
Insurance Coverage and Premium Stability
- The sum insured has increased from $12 billion to $20 billion, yet Air India’s annual premium expenditure remains steady at approximately $30 million.
- This is a notable achievement, considering the global rise in aviation insurance premiums due to recent industry accidents.
Factors Behind Favorable Insurance Terms
Sources indicate that Air India secured the policy at existing premium rates due to:
- Market softness in aviation insurance.
- Strategic negotiations with insurers.
- Strong risk management practices.
- A clean claims record, which reassured insurers.
Scope of the Insurance Policy
- The $20 billion policy covers aircraft damage due to incidents, accidents, or war-related risks.
- It applies to over 300 aircraft operated by Air India and Air India Express.
- A separate policy provides coverage for passenger and third-party liabilities.
Conclusion
Air India’s ability to secure a substantial insurance policy without an increase in premium highlights its strong financial management and risk mitigation strategies. This move ensures continued operational security and financial stability amid global market fluctuations.
