Aviation risk premium rates increase by 50%

Bangalore: For the beleaguered Indian aviation industry, there is one more difficulty to contend with — the hardening of aviation risk premiums. The rates are up 50 per cent.
For the last financial year, aviation companies, both public and private sector, paid an average of about Rs 1 crore per aircraft for a sum assured of approximately $30 million. The increase in aviation insurance premiums since the last month is expected to translate into an outflow of about Rs 1.5 crore per aircraft.
The reason for this jump? Global aviation reinsurance rates have soared by 50 per cent since the beginning of July. Aviation risk premiums are entirely reinsurance-driven. Aviation risk covers comprise three components — aviation hull, passenger liabilities and third-party liabilities. Reinsurance rates for the aviation sector were about 0.4 per cent of the sum assured last year. Since July premiums have jumped to 0.6 per cent, high level sources said.
Currently, the aviation risk business is dominated by the four PSU insurers — New India Assurance Company Ltd, United India Insurance Company Ltd, Oriental Insurance Company Ltd and National Insurance Company Ltd.
Aviation risk premium earned by the four insurers is currently Rs 320 crore per year.
05/08/09 C. Shivkumar/Business Line

To Read the News in full at Source, Click the Headline

Categories: Indian Aviation- In General Aug 2009