Eight private jets owned by corporate houses were irreparably damaged in the Chennai floods last December. The planes had been submerged under water for a prolonged period and the water entered the entire aircraft.
The eight jets, belonging to TVS Motor, Sun TV, Kalyan Jewellers, the Joyalukkas group and others, have a combined insured value of around Rs 500 crore and the entire claim value will have to be borne by insurance companies.
Among the damaged jets, Sun TV’s Bombardier Global Express carries the highest insured value (about Rs 260 crore). The other seven — Phenom 100, Embraer 500, Piaggio Avanti, Hawker 900XP, Learjet 60XR, Gulfstream G200 and Hawker Beechcraft Premier — are valued between Rs 18 crore and Rs 60 crore.
Sun TV and TVS Motors did not comment on the issue.
Chennai-based United India Insurance, among other insurance companies, has been involved in the process of assessing the claims through surveyors and loss assessors. Oriental Insurance and some private insurers were also involved and took a hit due to the floods. The share of public insurers was much higher.
In addition to the damaged jets in Chennai, insurers will also have to bear the loss claims of four helicopters and claim for damage to a SpiceJet aircraft in an animal collision incident in Jabalpur, making 2015 one of the worst in losses for insurers in India, according to Global Insurance Brokers.
“The damages to the jets and its 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 per cent of the costs,” said the head of a public sector general insurer, which had exposure to these jets.
The Chennai aircraft manufacturers, including Hawker, Embraer and Bombardier, have called for an evaluation of the damaged jets.
“The manufacturers ruled the aircraft are beyond economical repair,” said Sakeer Sheik, managing director of Titan Aviation, which manages aircraft belonging to V M Aviation, Garuda Jet and Kalyan Jewellers, whose jets were among those.
The cost of repair would be higher than the current fair value of these aircraft, sources said.
“Globally, the Chennai floods may not be considered as a big loss in the aviation sector. However, we have never faced this big a hit in this segment, which will directly hurt 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 at a public general insurance company.
Insurers expect premiums to go up in aviation insurance. There have been some indications of an increase in reinsurance premium.
“Year 2015 was one of the worst in aviation losses for insurance companies in India. There were four helicopter accidents last year, leading to three total loss claims by Pawan Hans and one by Himalayan Heli Services. The total insured value of the helicopters was about Rs 120 crore,” said Anant Pawar, chief broking officer, Global Insurance Brokers.
QUANTUM OF LOSS
Eight corporate jets were irreparably damaged during Chennai floods in December
Sun TV's Bombardier Global Express has insured value of about Rs 260 crore, while other jets are valued between Rs 18 cr and Rs 60 cr
Head of a public public sector general insurer says they will have to dismantle and sell parts as scrap, though they will only be able to recover 20-30%of the costs
- 2015 has been one of the worst years for aviation losses from an insurance perspective