A series of major and minor air-crash incidents have led to aviation insurance losses touching an all-time high of Rs 3,700 crore. The insured loss of close to Rs 664 crore in the recent AI Express crash led to a further spike.
Insurance sources said that 2014-2020 has been the worst six years for the aviation insurance segment. The size of the Indian aviation insurance market is estimated to be around Rs 8,000 crore.
The last crash occurred in August 2020, when an Air India Express Vande Bharat flight with 191 passengers and crew from Dubai, skidded off the tabletop runway and fell into a 50-feet valley, breaking into two, while landing at the Karipur airport, Kozhikode, Kerala.
“The crash led to a claim of close to $89 million, of which about 57 percent of the payout pertained to the hull loss and baggage claims, passenger deaths and injuries accounted for the rest. This is among the highest claims and will lead to a rise in premiums from FY22 onwards,” added a senior public sector insurance official.
In India, the past few incidents include damage to aircraft parts of Jet Airways and SpiceJet in separate incidents, apart from a Su-30 fighter jet crash and KingAir C-90 crash, among others. They have also led to losses of around Rs 2,500 crore.
The Sukhoi Su-30 crash in July 2018 had led to insurance losses of Rs 250 crore. New India Assurance, which is the country’s largest aviation insurer, was liable to pay the losses.
The Chennai floods in December 2015, when several aircraft and private jets belonging to companies were damaged, saw insurance losses of Rs 400 crore.
Due to a rise in air crashes and damage due to flights skidding from the runway, there has been a cumulative increase in the risk rating for airlines.
At the time of renewal of insurance policies, this risk rating is taken into account. Higher the risk rating (directly proportional to past claims), greater is the insurance premium applicable. Reinsurers which provide risk cover to insurers against large risks, like aviation, also increase premiums when there are higher claims.
