The already struggling domestic airlines, including the national carrier Air India, may have to pay higher insurance premium this year following the twin tragedy of the Malaysian Airlines, industry officials said.
The largest domestic carrier IndiGo is set to renew the insurance cover for its fleet this month, Air India and budget airline GoAir's insurance renewal is due for October, while that of Jet Airways is due in next January.
"Due to hardening of reinsurance rate for the aviation sector, post-two consecutive plane crashes of Malaysian Airlines within a period of four months, the aviation cover may go up when their policies come up for renewal this year," New India Assurance chairman and managing director G Srinivasan told PTI today.
These two major crashes have cast their major impact on domestic aviation insurance sector, Srinivasan added.
New India Assurance is the lead insurer for the Air India fleet for 2013-14 and is getting ready by joining with remaining three public sector general insurers to bid to renew the largest aviation insurance account for 2014-15 in the country.
"The recent Malaysian aircraft crash will have some impact on market sentiment and something which is not helpful for renewals which are in the pipelines as this is a wide-body aircraft," an executive with a reinsurance firm said, requesting anonymity.
"More importantly, the tragedy-hit plane (MH17, which was shot down by Ukranian rebels last week killing all the 298 on board) had loadings of European passengers which attract higher liability claims," he said.
However, he was quick to add that there was neither a decrease nor an increase in the renewal premium for Air India fleet for the past three years.The re-insurance prices may also go up in the sector due to the Malaysian Airlines crashes, GIC Re officials said. "There is a worldwide pressure on the insurers to increase their premium price for providing insurance cover to the aviation sector," ICICI Lombard chief of underwriting and claims Sanjay Datta said. Datta, however, did not hazard a guess as to how much the premium will go up.
However, the impact may not be much in case of renewal of private sector airlines insurance cover as renewal submissions have already happened in most of cases, he added. GIC Re is likely to pay over Rs 35 crore for the claim settlement of the ill-fated MH 17, while it had reportedly paid over Rs 75 crore to the other Malaysian plane which was lost in March and is yet to be traced.