HAL’s Sukhoi crash to cost insurer ~2.5 billion
State-owned general insurer New India Assurance will have to fork out around ~2.5 billion in insurance claims to Hindu stan Aeronautics Ltd( HAL ), following the crash of its Suk ho iSu -30 fighter jet near N as hi kl a st week.
This will be the largest claim in the aviation sector for Indian insurers in the lastthreeyears, saidsources.
TheSu -30 aircraft was on flight when it crashed last Wednesday. There were no casualties. HAL had insured the aircraft with New India Assurance for around ~2.5 billion. The policy covers manufacturer liability arising from accidents or incidents before it is handed over to the airforce.
HAL has manufactured over 4,000 aircraft for the defence forces since its inceptionin 1940. Itmanufactures SukhoiSu-30underalicence agreement with the Russian firm.
A HAL spokesperson did not respond to an email query.
New India Assurance Chairman G Sr in iv a san said :“We have been informed of theSukhoi crash and the ~2.5 billionclaim. The survey is going on .” Over 90 percent of the company' s aviation insurance business has been re insured with domestic and foreign reinsurers, headded.
TheSukhoi loss last week will result in the largest aviation pay out since Chen nai floods of December 2015. Eight jets owned by corporate houses were damaged during the floods, resulting in claims of around ~5 billion. The actual pay out is unknown but believed to have been around ~4 billion, making 2015 one of the worst years for aviation insurance in India.
Lastweek, a King Air C-90 aircraft crashed in Mumbai. This is expected to result in a claim of ~70 million.
Global re insurance rates have seen some hardening since last winter as hurricane sin the United States have resulted in multi-billion dollar loss claims, thereby wiping out profits.
However, the aviation insurance market in India is not expected to be affected much by the Su-30 crash. “The HAL insurance cover has been reinsured with domestic and foreign companies. We do not expect the incident to result in an immediate increase in premiums,” said Nikhil Kulabkar, lead of aviation practice at JLT Independent Insurance, a broking firm.
There have been a few large claims from airlines in the last three years, including Air India Express, Jet Airways and Spice Jet, for damage to their aircraft in air safety incidents.
Air India Express claimed around $20 million after an aircraft veered off the runway, with its wheels stuck in a drain at Kochi airport last September. The aircraft's engine, nose wheel and fuselage were damaged. It was back in service from January after an overhaul.
Jet Airways said it received ~400 million in claims towards damage of its aircraft in the previous financial year, while Spice Jeth ada large claim when its plane veered off the runway in Mumbai last September.