State insurers hot on aviation

Public sector insurers are now eyeing the aviation sector as a new line of business following the emergence of low-cost carriers such as Deccan Airways, SpiceJet Airways, Kingfisher Airways, Paramount Airways and Go Air.

M Ramdoss, chairman and managing director, Oriental Insurance Co, said, "We are keen on providing comprehensive aviation insurance with the entry of the many private air carriers and the increase in the number of aircraft in the country."

Ramdoss said although 98 per cent of the portfolio is reinsured with domestic and overseas reinsurance companies it is profitable insuring the aviation sector.

The reinsurance premiums for aircraft have come down by 15 per cent with fewer claims during the last year although there has been an increase in the number of aircraft to be insured, he added. With more number of aircraft being ordered by public and private air carriers in the coming years, this segment is bound to grow at a faster pace, he added.

The company has garnered about Rs 60 crore in providing cover for private commercial air carriers. Oriental Insurance has insured Paramount Airways, Spice Jet Airways and part of India Airlines and Air India. The two public air carriers, India Airlines and Air India, are insured by all the four public sector insurance companies for Rs 100 crore.

Amol Phadnis, head of underwriting, ICICI Lombard, said the company has made a conscious effort to take advantage of the booming aviation sector by offering insurance cover for corporate-owned aircraft and have extended its cover for private air carriers this year. The premium earned from aviation sector for ICICI Lombard is about Rs 15 crore during the current fiscal.

Phadnis said that cause of concern is the development of necessary infrastructure in terms airport capacity to withstand the increased air traffic.

ICICI Lombard is the only private insurer to cover private air carriers Kingfisher and Go Air. National Insurance provides insurance for Air Sahara and New India Assurance covers Air Deccan.

Industry experts say that a private insurance company does not have the big balance sheet to cover such risky portfolio such as aviation sector. The risk covered under aviation sector will be aircraft hull, third party liability, passenger legal liability among others.