Air India, under its new Tata management, has taken a Rs 60,800 crore ($8 billion) cover by paying Rs 266 crore premium to a clutch of insurance companies, including Tata AIG General Insurance.
The airline managed to get a better deal as it valued its fleet lower by almost $2 billion.
The new management held extensive negotiations – both in India and London, to get a good deal considering the rising premiums due to the ongoing Russia-Ukraine war.
As per the new policy, the airline will not be able to fly over Russian and Ukrainian airspace due to the conflict.
The new cover, effective April 1 for a year, will be marginally higher than Rs 258 crore paid in the last financial year by the airline under its previous owner, the Indian government, said a source close to the development.
In the last financial year, the airline had taken a cover of Rs 76,000 crore ($10 billion).
The policy also includes passenger liability in case of any mishaps.
A Tata group spokesperson did not comment on the cover.
As of now, Air India has a fleet of 117 aircraft while Air India express has a fleet of 24 narrow body aircraft.
Tata AIG General Insurance for the first time received a 30 per cent share in the cover while one of its parent, AIG continued to be the re-insurer leader of the new policy.
New India Assurance has taken the highest share of 40 per cent of the policy while ICICI Lombard has received six per cent share in the policy.
The Indian companies will pass on 95 per cent of the premium and risk to the foreign reinsurers so as to de-risk their books in case of any accidents.