New India Assurance to give Air India $6.5 bn cover

June 30th, 2008 - 10:01 pm ICT by IANS  

New Delhi, June 30 (IANS) The state-run New India Assurance Co Ltd will provide $6.5 billion insurance cover to Air India’s 140 aircraft from Tuesday, an airline official said Monday. Jitendra Bhargava, spokesperson of Air india, said there were two bids - one for the public sector insurance companies and the other for private insurance companies. The consortium led by New India Insurance won the bid for public sector companies.

“The insurance will be for a year,” said Bhargava.

He, however, added that he was not aware whether ICICI Lombard was a co-insurer to the insurance deal.

The $6.5 billion insurance cover, sought by National Aviation Co of India (NACIL) that runs the merged entity of four alrines including Air India, is the highest insurance coverage by any airline company in the Indian sub-continent, airline officials said.

Air India’s 2007-08 insurance contract was bagged by New India Assurance with ICICI Lombard General Insurance Co Ltd as a co-insurer.

The new insurance cover will be provided to a fleet of the merged Air India, Indian (erstwhile Indian Airlines), Air India Express and Alliance Air, which in all are about 140 aircraft, said an official.

Last year, the exposure value of Air India, before the merger with Indian took place, was around $3 billion covering about 50 aircraft. But this year - with increase in aircraft - the insurance cover would go up considerably, said the official.

NACIL has already managed to get at least 15 percent discount on existing insurance rates for covering its non-aviation business in 2008-09. ICICI Lombard, scoring over state-run insurance companies and private companies, won the business.

Three other public sector insurance firms - Oriental Insurance Co Ltd, United India Insurance Co Ltd and National Insurance Co Ltd - also took part in the bidding. These companies dominate the aircraft insurance business and cover NACIL’s competitors such as Jet Airways (India) Ltd, Kingfisher Airlines Ltd and Deccan Aviation Ltd. Also private insurance companies including the ICICI Lombard participated in the bidding.

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