Air India takes INR 60,800 crore cover for fleet insurance

Air India, under its new Tata management, has taken an INR 60,800 crore (USD 8 billion) cover by paying INR 266 crore premium to a clutch of insurance companies, including Tata AIG General Insurance.

The airline managed to get a better deal as it valued its fleet lower by almost USD 2 billion. The new management held extensive negotiations – both in India and London, to get a good deal considering the rising premiums due to the ongoing Russia-Ukraine war.

As per the new policy, the airline will not be able to fly over Russian and Ukrainian airspace due to the conflict.

Air India takes INR 60,800 crore cover for fleet insurance

The new cover, effective April 1 for a year, will be marginally higher than INR 258 crore paid in the last financial year by the airline under its previous owner, the Indian government, said a source close to the development.

In the last financial year, the airline had taken a cover of INR 76,000 crore (USD 10 billion). The policy also includes passenger liability in case of any mishaps. A Tata group spokesperson did not comment on the cover.

As of now, Air India has a fleet of 117 aircraft while Air India Express has a fleet of 24 narrow-body aircraft.

Air India has a fleet of 117 aircraft

Tata AIG General Insurance for the first time received a 30% share in the cover while one of its parents, AIG continued to be the re-insurer leader of the new policy. New India Assurance has taken the highest share of 40% of the policy while ICICI Lombard has received a 6% share in the policy.

The Indian companies will pass on 95% of the premium and risk to the foreign reinsurers to de-risk their books in case of any accidents.

On 25 October 2021, the central government, previous owners of Air India, signed a share purchase agreement with Tata Group, after its INR 18,000 crore winning bid to acquire the airline.

The sale was closed on January 27, 2022, with the formal handing over of the airline to its new owner, Talace Pvt Ltd, a subsidiary of Tata Sons.

Tata AIG General Insurance Company Limited is an Indian general insurance company and a joint venture between the Tata Group and American International Group (AIG). Tata Group holds a 74% stake in the insurance venture with AIG holding the balance of 26%.

Tata AIG General Insurance Company, which started its operations in India on 22 January 2001, provides insurance to individuals and corporates.

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