Page 6 - Insurance Times May 2019

ICICI Lombard net up Air India insurance renewal cost doubles to $28 million

7.5% at Rs. 228 crore in on growing risk factors
Air India's insurance renewal cost has almost doubled to around $28 million
Q4
for the year 2018-19 as a host of adverse factors
ICICI Lombard General Insurance, including the recent crash of an Ethiopian Air-
announced a lines.
7.5 per cent
increase in The insurance renewal deal for the national
net profit at carrier's fleet of 180 aircraft, with a sum assured
Rs. 227.73 of $12 billion, the largest Indian aviation insur-
ance account, is currently getting concluded in
crore for the
the London market and would be effective from April 1. Air India's insurance
fourth quarter of 2018-19, led by
healthy growth in gross written pre- renewal also includes $30 million passenger liability cover. Considering the
mium. Its net profit amounted to Rs. hardening of the market, Air India which normally renews its insurance account
211.87 crore for the quarter ended in October of every year, had sought six month extension for its existing cover
March 31, 2018. in October.
Air India is purely a reinsurance driven account and almost over 95 per cent of
The insurer reported a gross pre-
the cover is reinsured in the London market. Air India's renewal premium had
mium written of Rs. 3,527.89 crore
for the January to March 2019 quar- constantly fallen for the last few years till 2017-18 when it had availed a dis-
ter, against Rs. 2,969.98 crore a year count of 20 per cent and had paid premium of $ 14 million. The national car-
rier had shelled out a total premium of $18.38 million in 2016-17, which was
ago. Gross domestic premium in-
come of the insurer increased by 30 per cent lower than the previous year's premium.
19.1 per cent to Rs. 3,485 crore in New India Assurance, India's largest general insurance player, is the lead insurer
the fourth quarter of the fiscal from of the Air India deal while reinsurance deal is led by the US major AIG.
Rs. 2,926 crore a year ago. "Exclud- "The aviation insurance market has been hardening for the last one year with
ing crop segment, the GDPI growth Ethiopian crash and the Pulwama terrorist action putting extra pressures on the
for the fourth quarter of the fiscal markets at the time of the Air India's premium pricing," said sources in the
was 29.4 per cent," the insurer said. London market, adding that there were some claims of over $ 40 million from
The combined ratio improved to the Air India side.
98% in the January to March 2019 India has many large aviation insurance accounts including Jet Airways, IndiGo
quarter from 99.5% in the same pe- and Jet and GoAir which have to face a hard market when they come for re-
riod a year ago. "It has been an ex- newal in the next few months, aviation insurance analysts said. Jet Airways is
cellent year with robust topline insured with Oriental Insurance while SpiceJet and IndiGo are insured with NIA.
growth," said Bhargav Dasgupta,
Managing Director and CEO, ICICI GIC Re exposure in Ethiopian Airlines crash only 3%
Lombard General Insurance.
GIC Re had a 3% exposure in Ethiopian Airlines insurance cover and would be
For 2018-19, the insurer reported a settling the claims proportionately soon for the
21.8 per cent increase in net profit crashed aircraft, said a source. An Ethiopian Air-
to Rs. 1,049 crore against Rs. 862 lines passenger jet bound for Nairobi had crashed
crore in 2017-18. minutes after take-off, killing all 157 people on
Its solvency ratio was 2.24 times at board, raising questions about the safety of the
March 31, 2019, against 2.05 times Boeing 737 MAX 8, a new model that also
at March 31, 2018. The company crashed in Indonesia in October.
also paid an interim dividend of Rs. Insurers typically form a consortium to share the risks of large claims, with the
2.50 per share during the year. "The lead insurer taking a larger proportion of the risk. The insured value of the plane
board of directors has proposed a itself was likely around $50 million (£38 million), according to industry sources.
final dividend of Rs. 3.50 per share Britain's Global Aerospace was the lead insurer for Boeing and also for Lion Air,
for 2018-19," it said in a statement. which operated the plane that crashed in October.

6 The Insurance Times, May 2019