Jet Airways closure to affect PSU insurers
As far as the losses of these insurers are concerned, pricing factor in aviation space plays a key role for these insurers.
New Delhi: With Jet Airways’ closure of its flying operations from April 17 that has led to all the flights being grounded indefinitely, state-owned insurers, mostly large insurance players like New India Assurance (NIA) and Oriental Insurance Company (OIC), have been badly hit by its suspension.
As far as the losses of these insurers are concerned, pricing factor in aviation space plays a key role for these insurers. Generally, the pricing in this space is driven by past claims as well as the reinsurance experience. Even in the global air crashes, it leads to an increase in the premium payable by the airline.
However, a top source in the insurance sector told Financial Chronicle that apart from leading public sector general insurers including NIA, it was a sad day for OIC too as its trophy account, Jet Airways, faced an abrupt closure.
“OIC on its part ensured that very efficient service was given to this client. Failure of this airline is rather baffling, as it never offered cheap tickets and flights that were always full. There could be a number of reasons of its failure, such as competition, bad business decision, frequent changes in management, diversion of funds etc,” the source said.
“However, despite all the competitions, Jet Airways continued to stay with OIC, courtesy Prabodh Thakkar, Chairman at Global Insurance Brokers Pvt Ltd,” the source added.