In FY19, total aviation premium written by domestic insurers stood at Rs 544 crore.
Chennai: Insurers find the aviation sector a little more riskier than before. Insurance rates for airline covers have hardened and this saw aviation insurance premiums written by domestic insurers touch the highest in more than 10 years in FY19 and growing 34 per cent over the previous year.
In FY19, the total aviation premium written by domestic insurance companies stood at Rs 544 crore against Rs 407 crore in FY18—up 33.6 per cent, as per the data from the General Insurance Council. In the past two years the premiums have been coming down. In FY16, the industry wrote a premium of Rs 447 crore, which went down by 3.8 per cent in FY17 and 5.3 per cent in FY18. Having crossed the Rs 500-crore mark, the aviation premiums are the highest since 2008-09.
“The premium rates have been hardening due to recurring losses suffered by insurers in case of some of the airlines. Between FY18 and FY19 in some cases the premiums have gone up by 150 per cent,’ said Sanjay Datta, Chief-Underwriting, Claims & Reinsurance, ICICI Lombard General Insurance Company.
Domestic premiums are influenced by the international rates as well. Globally, the rise in accidents in the aviation sector had pushed up the rates. These rates could further go up in FY20 as four major aircraft accidents were reported in the past few months.
Premiums are calculated on the basis of the number of aircraft operating and the number of passengers flying, said R Chandrasekaran, Secretary General, General Insurance Council. The sector has been adding capacity and number of flyers also has been going up steadily, contributing to the premiums.
According to Mayur Milak, Senior Research Analyst, IndiaNivesh, the aviation industry as been adding capacities by 18 to 20 per cent every year.