Noida, India (PressExposure) December 08, 2009 -- Propelled by increasing aviation accidents, the GIC has suggested hiking reinsurance premium rates in aviation industry by a healthy margin.
The proposed hike if gets applied, will be another major setback for the struggling aviation industry that is still on recovery trail, thanks to global meltdown that brought the growth levels of the industry to standstill.
Year 2009 has been a bad one for the re insurers as number of air accidents has dented the balance sheets and financial statements of the respective insurance providers across the world which too have been struggling to find their footsteps.
GIC, which render its general insurance solution to 90 percent of the total aviation reinsurance contracts to foreign airlines, has also been at the receiving end of such accidents. The list of accidents which include Air France flight 447 crash, Colgan Air, Turkish Airlines, Yemenia Airways plane crash and the Caspian Airlines flight 7908 (Iran accident) seems to have formed the base for the decision. The Air France accident alone cost a sizeable $5 million to the organisation.
In fact, if the move actualises, the same will be applicable to domestic airlines too. Presently, the reinsurance rates for aviation insurance differs between 0.18 percent to 0.23 percent.
However, GIC ruled out the possibility of hiking premium rates in any of their other products as of now.