Page 27 - Insurance Times August 2020

of shakedowns. This has cemented the way to aviation events and decided to tighten the rules for them. Insurance
insurance. Aviation insurance is a dedicated insurance which premiums were increased when contracts came up for
has been framed to offer coverage to the precise operations renewal and renegotiation. It is very difficult for the aviation
of an aircraft and other conceivable jeopardies in aviation. insurance consumer to admit these sky-high rates with more
Although aviation insurance was first introduced in the early strict underwriting guidelines. It is significant, however, for
years of the 20th century, the concept of aviation insurance aircraft owners and operators to keep in mind that the long-
has gained thrush only of late. term health of the aviation-insurance industry is at stake.

Numerous aircraft tragedies have not only encouraged more According to the report of insurance industry officials as a
and more people to buy aviation insurance, but it has also result of weak cash flows many airlines have necessitated
amplified the number of claims by a gigantic margin. The policy renewals and new policy purchases postponed by
clauses, terms, limits in aviation insurance are exceptionally three months to twelve months. They have also demanded
inimitable. The nature of coverage and the amount of waiver on renewal of insurance policies and 30 to 40 percent
premium hinge on the type of aircraft that is being covered lower premiums. They are also looking to better our terms
by the policy. Aircraft insurance provides protection against and conditions with their insurers as well. On the other hand
wide range of perils and shelters repairs to spoiled airplanes during financial year 2019-20, the premium from sales of
or other flying machines. Across-the-board coverage may new pure aviation policies stood at approximately Rs.687
also include impairment caused to airports, hangars, and crore, which was roughly 24 per cent higher than about
other relevant land-based property. Rs.556 crore collected by the insurers in the previous
financial year.
New India Assurance Company Limited, Allianz Global
Corporate & Specialty, AON Global India, Farsight India These higher insurance costs unfortunately came at a time
Wealth Management and Emedlife are the few companies when loss ratios were increasing, leading to a lack of profits.
offer aviation insurance to customers. Though the claim Many insurers have stiffened underwriting strategies and
process for aviation insurance is quick and hassle free, are now refusing risks they would have quoted in the past.
number of documents such as aircraft details document, Large number of aircraft owners will find that there is less
flight details document, details of the crew members, elasticity on recurrent-training necessities, more
documented proof of the accident, information on aircraft's unwillingness to over-insure hull values and offer high liability
maintenance and engineering and documents of operational edges, and less attention from underwriters when there is
manual passenger have to be submitted for the settlement. any loss history on an account.
In the present scene, there are many aviation policies that
are making their presence felt with attractive features, Five years ago, in 2015, the Directorate General of Civil
viable cover plans, and a lot more. Aviation made it compulsory for pilots to undertake
psychiatric test before takeoff as any failure to pass the test
Airline industry not on cloud nine could lead to cancellation of flights and claims. This has

According to a survey in London, as a result of the deadly
corona virus pandemic the aviation segment holds the
hugest risk of corporate default. Moreover, due to major
portion of the operating costs namely aircraft leasing,
maintenance and fuel overheads are paid in American dollar,
Indian airlines are twisting and turning at a time when rupee
has devalued by approximately 6 per cent since January
2020.

To make the scene more horror, the burden of insurance
premium is mounted. Insurance industry badly affected by
the winds of change blow at the end of 2017. They suffered
huge insured loss of 130 billion dollars because of severe
hurricanes, wildfires and other natural adversities. They
thought that aviation books are not burnt by these unlucky

The Insurance Times, August 2020 27