The Air India Express will get about Rs 374 crore towards the loss of its Dubai-Kozhikode aircraft in the accident in Kozhikode airport last month, a senior insurance industry official said.
On August 7, the ill-fated Air India Express skidded off the runway of the Kozhikode airport and fell into a valley before breaking into two pieces, killing 18 persons and leaving scores injured.
“The total claim amount to be paid to Air India Express for loss of aircraft/hull will be about $51 million. The aircraft has been insured for $50 million which will be paid as it is a total loss. A sum of $1 million will also be paid towards increased cost of working," the senior official with one of the four insurers told IANS preferring anonymity.
According to the official, an interim payment or ‘on account payment’ is expected to be paid to Air India Express sometime next week.
“The airline has to submit the necessary documents called for by the lead reinsurer. Once that is done the claim will be processed. The claim payment to Air India Express will be made by the lead primary insurer and recovered from the lead reinsurer," the official added.
Adding further he said the claim is on track and most of the papers that have been called for have been submitted by the airline and the interim payment will be made soon.
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As a part of the claims procedure, the insurers/reinsurers will call for documents like the accident investigation report, aircraft maintenance log book and pilot log book, among others.
A consortium of four public sector insurers a" New India Assurance, National Insurance Company Ltd, Oriental Insurance Company Ltd and United India Insurance Company Ltd — has insured the fleet of about 170 aircraft belonging to Air India and its subsidiaries, including Air India Express.
The airline has taken policies covering the aircraft or hull and liability for third party and passengers.
The total premium earned from Air India was about $36 million.
The share of New India in the premium and claims will be 40 per cent and the balance 60 per cent will be shared equally by National Insurance, Oriental Insurance and United India.
Industry officials told IANS that the direct claim hit for the consortium of four insurers will be only about 10 per cent of the aircraft value.
The balance value of the risk has been reinsured with Indian reinsurer GIC Re — 5 per cent obligatory cession and 85 per cent with reinsurers with the lead underwriter, AIG, London.
According to the official, the loss adjuster — Charles Taylor Adjuster, London — have to submit the accident survey report.
The accident is under investigation and the final survey report may take some time.
Out of its total fleet of 25 Boeing 737-800 NG aircraft (post crash 24 aircraft), Air India Express owns 17 aircraft (16 post crash) and the balance eight were taken on lease.
A senior insurance industry official told IANS that the entire claim amount will be paid to the airline if it is an owned aircraft.
If there is any loan taken on the plane then the financier will also have a financial interest in the crashed craft.
All the owned aircraft of Air India Express underwent refurbishment of the cabin involving a change of seats, carpets and curtains.
The airline had said the refurbishment project resulted in the empty weight of the aircraft reducing by about 800 kg due to the lighter weight of the new seats, resulting in the gain of additional traffic payload and revenue earning capability to that extent on every flight.
As the aircraft is now a total loss, the scrap value will be calculated and adjusted against the claim amount.
As regards the compensation to be paid to the legal heirs of passengers who had died in the accident and to the passengers who have injured, the matter is being handled by global law firm Clyde & Co headquartered in London, the insurance official said.
Though the passenger liability is as per the Montreal Convention, the amount is the maximum compensation amount and not the minimum, the insurance official added.
For working out the compensation for the dead and injured passengers, their profile had to be made taking into account their annual income, dependents, nature of injuries and others.
Taking the above factors into account, the compensation to be paid to dead and injured passengers will be worked out and an offer would be made to the legal heirs and the injured passengers.
Passenger liability also covers the baggage value.
The insurance official said the total commercial aviation insurance market in India with about 510 aircraft will be about $90 million.
“The risk is concentrated on a small base while the value is very high," the official remarked.
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