India: Private jets damaged in floods insured for US$73 mln
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1 Mar 2015Eight corporate jets which were submerged under flood water at Chennai airport last December are being written off as the damage is beyond repairs. The aircraft have a combined insured value of around INR5 billion (US$72.7 million).
The entire claim value will have to be borne by insurance companies, reported the Business Standard.
“The damages to the jets and their parts are severe and cannot be restored. Hence, we will have to dismantle and sell parts as scrap, though we will only be able to recover 20-30% of the costs,” said the Chairman of a large public-sector general insurer which has exposure to these jets.
Chennai-based United India Insurance, among other insurance companies, has been involved in the process of assessing the claims through insurance surveyors and loss assessors. The share of state-owned insurers in insuring the jets is higher than that of private-sector insurers.
The eight jets belong to TVS Motor, Sun TV, Kalyan Jewellers, Joy Alukkas group and others. They were submerged for a prolonged period under water and there was water ingress in the entire aircraft body including avionics, auxiliary power units and engines.
As damage to the corporate jets in Chennai was substantial, aircraft manufacturers including Hawker, Embraer and Bombardier were called on to carry out an evaluation.
“The manufacturers carried out a damage assessment and ruled that the aircraft are beyond economical repair and hence the planes are being written off,” said Sakeer Sheik, Managing Ddirector of Titan Aviation which manages aircraft belonging to V M Aviation, Garuda Jet and Kalyan Jewellers. Jets of these three companies were amongst those damaged during the deluge.
The aircraft are being written off as the cost of repair would be higher than their current fair value, sources said.
In addition to the damaged corporate jets in Chennai, insurers will also have to bear loss claims four four helicopters and a claim for damage to a SpiceJet aircraft in an animal collision incident in Jabalpur making 2015 one of the worst years in terms of aviation losses in India, according to Global Insurance Brokers, one of the leading brokers in India.
Insurance sector officials said that in relation to the global aviation market, the Chennai flood losses are not very high since no third-party liability is involved. From an Indian perspective, the insurers have not previously faced losses of such a high quantum.
“Globally, the Chennai floods may not be considered as a big loss incident in aviation sector. However, we have never faced this big a hit in this segment which will directly hit our books. Some part of it was reflected in the third quarter and some of it will be visible in the fourth quarter,” said the general manager of a public-sector general insurance company.
Source: asiainsurancereview.com
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