According to a news report in the Indian financial daily Livemint, airlines in India are seeking reduction, waiver and deferral of insurance premium payments. The airlines have also asked for renewal of insurance covers one month at a time.
The news report quotes a top official at a general insurer saying, “Airlines have demanded policy renewals and new policy purchases deferred by three months to a year; waiver on renewal of insurance policies and 30-40% lower premiums. The airlines claim that since flights are not fully operational, aircraft mostly grounded and most staff on furloughs, the risks are much lower.”
The Indian aviation insurance market is estimated to be worth around $660m-$793m and in April and May this year, general insurers’ premium income from new pure aviation policies stood at $13.23m down 7.5% from $14.31m during April and May 2019.
During the financial year 2019-20, the premium from new pure aviation policies was $90.85m, which was 23.6% higher than the aviation premium income of $73.51m during 2018-19.
As part of a nationwide lockdown, air travel in India was suspended by the government from
25 March to prevent transmission of COVID-19. However, regardless of its flight operations, an airline needs to keep mandatory insurance cover.
The news report said, “Depending on the size of the cover, the premium ranges from 0.002% to 0.004% of the sum assured. Premiums are revised annually, depending on the claims in the previous period.”