Mumbai: IndiGo Airlines, country's largest carrier by fleet size and market share, is likely to face a single-digit percentage increase in aviation insurance premiums when its annual cover comes up for renewal this week, people familiar with the matter said.
The hike comes amid a hardening global reinsurance market following the recent fatal Air India crash in Ahmedabad, which could result in hull and liability claims exceeding $200 million.
The insurance renewal for IndiGo and SpiceJet-whose policies are up for renewal in October-is being closely watched by the industry as reinsurers raise prices in the wake of increasing global aviation losses.
Reinsurers in the London market, which underwrite a large portion of Indian aviation risk, are tightening capacity and pushing up rates for both hull and liability covers.
IndiGo's policy last year was led by New India Assurance, with co-insurers such as ICICI Lombard participating domestically. A large portion of the risk was ceded to overseas reinsurers, particularly in London, which continue to dominate aviation hull and liability insurance.
The carrier's combined hull, spares, and liability cover carries a premium of approximately $13 -15 million, industry sources said. The total insurance value for its 437 aircraft fleet stands at around $20 billion. Each aircraft-primarily Airbus A320 and A321 models-is insured for a hull value between $30 million and $45 million. The fleet includes a few wide-body aircraft recently inducted for international operations.
On the liability front, narrow-body aircraft typically carry coverage up to $750 million, while wide-body aircraft are covered for up to $1 billion. The current combined single limit (CSL) for liability stands at $1 billion, with maximum hull agreed value (MAV) at $150 million and spares at $300 million.
Reinsurance costs have been rising since late 2023, but the recent Air India crash has led to further tightening, with international reinsurers becoming more cautious on risk appetite.
The hike comes amid a hardening global reinsurance market following the recent fatal Air India crash in Ahmedabad, which could result in hull and liability claims exceeding $200 million.
The insurance renewal for IndiGo and SpiceJet-whose policies are up for renewal in October-is being closely watched by the industry as reinsurers raise prices in the wake of increasing global aviation losses.
Reinsurers in the London market, which underwrite a large portion of Indian aviation risk, are tightening capacity and pushing up rates for both hull and liability covers.
IndiGo's policy last year was led by New India Assurance, with co-insurers such as ICICI Lombard participating domestically. A large portion of the risk was ceded to overseas reinsurers, particularly in London, which continue to dominate aviation hull and liability insurance.
The carrier's combined hull, spares, and liability cover carries a premium of approximately $13 -15 million, industry sources said. The total insurance value for its 437 aircraft fleet stands at around $20 billion. Each aircraft-primarily Airbus A320 and A321 models-is insured for a hull value between $30 million and $45 million. The fleet includes a few wide-body aircraft recently inducted for international operations.
On the liability front, narrow-body aircraft typically carry coverage up to $750 million, while wide-body aircraft are covered for up to $1 billion. The current combined single limit (CSL) for liability stands at $1 billion, with maximum hull agreed value (MAV) at $150 million and spares at $300 million.
Reinsurance costs have been rising since late 2023, but the recent Air India crash has led to further tightening, with international reinsurers becoming more cautious on risk appetite.
