Dismal response to Air India's fleet cover bid

KOLKATA: The largest aviation cover in India , for Air India’s fleet, estimated at $9 billion (. 40,500 crore), has attracted only two bids — from ICICI Lombard and a consortium of New India along with three other public sector insurers.

Air India insurance policy is a hull, spares and liability policy which covers the aircraft value, passenger’s liabilities and suites in the case of an accident, fire, flood or natural calamity. Brokers and insurers say strict norms, including upfront payment in case of claims and low margins because it is largely reinsurance-driven , have lead to such low participation.

During 2010-11 , ICICI Lombard bagged the cover with a premium of $30 million (. 135 crore) and Air India’s fleet is valued at approximately $9 billion. The bids invited are for 2011-12 . Rajive Kumaraswamy, head reinsurance at ICICI Lombard confirmed that the company has submitted its technical bids for the cover during 2011-12 . “We have submitted technical bids.

The existing cover comes up for renewal on October 1. Following this we will submit financial bids.” IS Phukela, GM also confirmed that New India is the lead insurers along with four insurers – United India, National Insurance, Oriental Insurance and private sector – SBI General Insurance.

A private sector general insurance official who did not want to be quoted said: “The Air India aviation cover is re-insurance driven and it offer low margins. It may add to the total premium income but does not add much to the net profits.” In the earlier years, companies like Reliance & IFFCO Tokio had participated in the Air India aviation cover tenders, but they have decided to refrain from participating this time.