Airlines seek to defer payments of insurance premium
Airlines squeezed by continuing air travel curbs are seeking reduction, waiver and deferral of premium payments, and renewing cover for shorter durations,five top industry officials said.
On 25 May, India permitted limited resumption of air travel; however, a large number of aircraft remains grounded since the coronavirus lockdown began in March, depriving cash flows to pay salaries and buy insurance. Aviation insurance covers specific aircraft operations and possible risks in aviation.
According to a top official at a general insurer, airlines have demanded policy renewals and new policy purchases deferred by three months to a year; waiver on renewal of insurance policies and 30-40% lower premiums. The airlines claim that since flights are not fully operational, aircraft mostly grounded and most staff on furloughs, the risks are much lower, the official said on condition of anonymity.
“This time, since it is a wait-and-watch situation, airlines are demanding three-month and monthly insurance cover policies from general insurers so that the airlines are required to pay lower premium to keep their mandatory cover on and then go for longer term policies once the situation eases,” the official cited above said. Typically, airlines buy policies of one- to two-year durations.
