MUMBAI: Air India is likely to get its $10-billion fleet insurance programme renewed next week without a major increase in premium despite a hard reinsurance market. War rates for aviation insurance have doubled since the Ukraine invasion. But ‘hull’ insurance rates, which form the bulk of the premium, have not yet increased as insurers are yet to decide on whether the 400 aircraft confiscated by Russia from leasing cos are theft or an act of war.
Aircraft lessors have lost 400 planes valued at $10 billion after Russia banned airlines from returning planes to their owners in a tit for tat response to the sanctions and freezing of Russian assets by the West. In case the loss is determined to be an act of war, the claim impact would be low as insurers provide low limits for war insurance. However, if it is determined to be theft, the claims will take a heavy toll on the reinsurance industry and cause rates to rise further.
