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Aviation insurance policies that were primarily used to cover the fleet of the airline companies is now in demand for the other covers provided by this policy. Insurance companies said that apart from airline insurance, covers for ground handling and aviation product liability has been increasingly being looked out for, by companies in the aviation space.
The traditional fleet insurance policies cover damages caused by major accidents and natural catastrophe are covered. Incidents of hijacking, enemy attacks and invasion are excluded from policy coverage.
"We are now looking at aviation products, general aviation and aerospace insurance covers. In the next few months, we will look at airline insurance as well," said M Ravichandran, president-insurance, Tata AIG General Insurance.
Insurance companies said that there is a rise in the number of companies operating in the aviation space. From a time when all airport operations were handled by a single player to a time when there are multiple players operating in the market for each function, the coverage requirements are very different. Hence, the covers have also been customised to suit the client needs.
The premiums for this segment are dependent on the size of the airport operations, number of airlines using the services and air-traffic data on an everyday basis in the location. With an increase in the number of airports in India and new airline companies entering the market, general insurers said that they will have to penetrate the market through expanding into newer routes and cities. This will automatically lead to a growth of aviation insurance market, according to the underwriting head of a private general insurer.
Over and above the fleet, aviation insurance policies of non-life insurers also covers general aviation, airport liability, loss of license insurers for crew of the airline (due to medical reasons) among others. Some companies also offer products that are customised for individual companies and airports, depending on the size and varied requirements.
Manik Nehra, Senior Manager - Aviation Insurance, Bajaj Allianz General Insurance said that because of the new airports coming up, there will be a demand for aviation insurance products such as Ground Handlers Liability & Aircraft Fuelling Liability. "With the growing Maintenance, repair and overhaul (MRO) set up & Original Equipment Manufacturers (OEMs) in India, the demand for insurance covers such as Hanger Keepers Liability & Aviation Product liability has gone up. In the last two years, there has been a growth in the segment and we expect it to continue" he said.
Nehra added that the cover limit of the aviation ground handler’s liability insurance in India is generally around $2-5 million, which will increase as international carriers enter the market. "With new routes and new cities being added by aviation companies, the demand for aviation insurance will only go up," he added.
Aviation Liability covers, which are also becoming popular, cover liabilities arising out of ground handling, delays, passenger injury due to accidents, baggage liability and other third party risks. The chief executive officer of a mid-size private general insurance company explained that there could be more than two insurers in the near future providing cover for different segments in the same airport.
This, he added, will open the market for other insurers to enter and expand their services. At present, aviation insurance as a whole constitutes much lower than 10 per cent of the total product portfolio of the non-life companies and is a part of their corporate insurance cover.
