Kathmandu. Indian airline Air India has secured a $20 billion aircraft insurance renewal without increasing premiums. After the merger with Vistara Air, Air India has secured $20 billion worth of insurance coverage for its expanded fleet.
According to Asian Insurance Review, the increased number of aircraft after the merger has increased the reinsurance premium from $12 billion to $20 billion. This amount is approximately 2774.9 billion Nepali rupees at the prevailing exchange rate. The reinsurance premium for the aircraft of India’s national flag carrier Air India is almost one and a half times higher than the annual budget figure announced by the Nepal government for the current fiscal year 2081.82.
According to Asian Insurance Review, despite the increase in reinsurance premium, Air India’s insurance premium expenditure will remain stable at around US$30 million (Rs. 4.16 billion 11 million).
Despite the global increase in aviation insurance premiums due to recent accidents, Air India has received favorable rates. According to sources, the achievement is attributed to a combination of market softness, strategic negotiations, strong risk management practices, and the airline’s clean claims record, Asian Insurance Review wrote. Just as big businessmen in Nepal enjoy credit facilities from commercial banks at much lower interest rates than the general public, Air India has also managed to keep its insurance costs almost constant by efficiently negotiating with reinsurers, including its number of aircraft, turnover figures, and the number of aircraft to be added in the future.
Over the past few years, Air India has been keeping flight safety as a top priority and has been controlling even the smallest negligence that may occur before, during, and after flights. Due to this, its aircraft have not experienced any major technical malfunctions or aircraft accidents.
A $20 billion insurance policy will cover the risk of aircraft damage due to incidents, accidents, or war. This will be applicable to over 300 aircraft operated by Air India and Air India Express. In addition, a separate insurance policy covers passenger and third-party related liabilities.
