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Air India plane crash unlikely to hit insurers badly

Air India plane crash unlikely to hit insurers badly
PTI
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First Published: Mon, May 24 2010. 10 16 AM IST
Updated: Mon, May 24 2010. 10 16 AM IST
New Delhi: The Reliance General-led consortium which insured Air India’s fleet, including the aircraft that crashed in Mangalore, may not be hit hard by the accident, as they had taken re-insurance.
Generally, all large risk, including that of airlines, is re-insured. It helps general insurance companies mitigate financial risk in case of claims arising out of damage, said insurance experts.
The bulk of the burden would be on the re-insurers as far as claim settlement in this case is concerned, said Optima Risk Management chief executive officer Rahul Aggarwal.
According to insurance industry sources, the Air India fleet is insured by four private companies led by Reliance General. The other general insurers include Bajaj Allianz, HDFC Ergo and Iffco Tokio.
This was reinsured by Japanese insurer Mitsui Sumitomo and General Insurance Corporation of India together, sources said.
Airline insurance is specialised insurance because of its nature. It is low frequency but high impact, he said, adding, airline crashes does not happen frequently, but when they do, the claims are huge.
Asked about the loss Reliance General would incur due to the crash, its spokesperson said as a policy, the company does not comment on individual policy details and claims.
Meanwhile, Air India announced an interim compensation for the victims of the air crash, including Rs10 lakh for the families of those above 12 years of age.
“They (Air India) were in talks with insurance companies, including Reliance Insurance and General Insurance Company, on payment of compensation,” said Air India chairman and managing director Arvind Jadhav.
“We are announcing an interim compensation. We will give them money immediately,” he said.
The kin of the deceased who are above 12 years of age will be given Rs10 lakh, while the families of those below this age will get Rs5 lakh. Air India will pay Rs2 lakh as interim compensation to the injured.
He said 128 bodies have been identified and handed over to relatives.
“Eighteen more bodies have been identified and the post mortems are in progress. Twelve bodies have not been identified as yet,” Jadhav said.
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First Published: Mon, May 24 2010. 10 16 AM IST