Airline's insurance cost may soar now

Mumbai: National Aviation Company of India (Nacil) faces the risk of higher premium for its $6.5 billion insurance cover for its fleet following
an engine fire in its Riyadh-bound Boeing 747-400 on Friday. After postponing a decision to renew its insurance cover in July 2009, the flag carrier is under pressure to take a snap decision.
From the insurance perspective, things have not been good for Nacil after it delayed its insurance purchase in July 2009 in the hope that a re-tendering will bring in bids lower than the $19 million it paid last year. Nacil’s hopes have been dashed as there had been a couple of major aviation accidents. Since it is a small club of aviation underwriters that take on their books, the insurance risks of all the world’s airlines, a few plane crashes are enough to upset their books. Despite retendering, companies brought in fresh quotes that were close to earlier bids. After Friday’s incident, Nacil is under pressure to accept whatever is on offer. A cross section of insurance brokers ET spoke to said that Nacil will have to take a decision fast and freeze the cover before the market turns even worse.
05/09/09 Mayur Shetty/Economic Times

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Categories: NACIL Sep 2009