Jet airways seeks $5.5-bn cover

Mumbai: With its current cover set to expire on April 16, Jet Airways is seeking a cover of around $5.5 billion from the government-owned Oriental Insurance.
According to industry sources, the premium is estimated to be around Rs 70 crore, seven per cent higher than last year.
Recently, government-owned Air India’s premium rose by around 14 per cent when it went for an annual policy cover. As against the Rs 109 crore paid for the earlier cover, the national carrier paid Rs 125 crore this time.
The increase in premiums can be seen in the backdrop of the Mangalore air crash and other major aircraft accidents globally, which led to a rise in aviation reinsurance rates all over the world.
Under the existing policy, the sum insured for Jet Airways and JetLite was $4.4 billion and $669 million respectively, with the total premium around Rs 65 crore, sources close to the development said.
“There has been an increase in aviation reinsurance rates globally, leading to an increase in premiums,” said a reinsurance broker.
As far as aviation policies in India are concerned, 85-88 per cent of the risk is reinsured with foreign reinsurance companies as the capacity of domestic general insurers is limited.
Air India, whose policy begins from October 1 every year, went for a cover of around $9.1 billion, compared to the earlier one of $8.9 billion. While ICICI Lombard General Insurance is the lead insurer, the share of the four government-owned general insurers — New India Insurance, Oriental Insurance, National Insurance and United India Insurance — is 40 per cent of the premium. Consequently, 60 per cent of the risk is borne by ICICI Lombard, with the rest being equally shared by the four general insurers. Run by the National Aviation Company of India Ltd, Air India is the largest airline operator in India.
22/03/11 Niladri Bhattacharya/Business Standard

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Categories: Jet Airways Mar 2011