Aviation sector’s reinsurance premiums may climb 5%

Bangalore: The domestic aviation sector may have to face more turbulence as reinsurance premiums are expected to escalate by 5 per cent. The possibility of further increases was hinted at by one of the world’s largest aviation reinsurers, AXA Group. The Chief Executive Officer of AXA’s Asia-Pacific General Insurance, Mr Jan Van Den Berg, said, “Aviation risk premiums will go up by another 5 per cent and will continue to rise till losses are recovered.”
That premium increases were inevitable was highlighted in a report by global aviation reinsurance broker Aon Aviation and Aerospace. “Even premium increases of 20 per cent are unlikely to make 2009 a profitable year for underwriters,” the report states.
Global insurers’ losses are estimated at $1.86 billion this calendar year, against $962 million for the whole of last year. The report said, “The losses also affect the reinsurance programmes that protect and underpin their (reinsurer) business plans.”
Apart from underwriting losses, Mr Den Berg said, “The losses have also been compounded by investment losses.”
Mounting Losses
The combined underwriting and investment losses imply that global aviation reinsurance capacities are still shrinking. As a result, Mr Den Berg added, there was little alternative other than increases in aviation risk premiums that could continue well into 2010.
Air India faced the situation of escalating premium despite using the bid process as aviation insurance is entirely reinsurance driven.
A consortium led by Reliance General Insurance, an Anil Ambani group company, won the mandate for Air India risk cover despite stiff competition from public sector insurers.
16/10/09 C. Shivkumar/BusinessLine

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Categories: Indian Aviation- In General Oct 2009