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While the loss of a near and dear one is irreparable, one must pick up the threads and ensure life continues. For the survivors, insurance is perhaps the vital link in putting their life back on track. And help could come from different shores.
It is mandatory for all airline companies to provide third-party liability cover. As India is a signatory to the Montreal Convention, the next of kin are provided upto 1 lakh special drawing rights (roughly $1,47,908) per passenger, which comprises a mix of currencies established by the International Monetary Fund. At current rates, it provides around $1.5 lakh to the next of kin. If the relative of the deceased believes that the compensation is little, one can appeal against it. It then becomes mandatory for the airline to prove that the incident was not on account of its negligence but that of the third party. "The incident (crash at Mangalore) is a major incident. Air India will ensure that it will undertake to pay compensation to the next of the kin," said an insurance broker.
Sources also said that next of kin should also check whether the passenger has obtained a travel insurance. "Travel insurance is a must if one is travelling overseas notably for US and Europe. One doesn't know how many passengers coming in have availed of this and India does not make travel insurance mandatory for incoming travellers. There could be a possibility that they have obtained a policy notably in case of a round-trip," said an insurance expert.
While it would be difficult to establish the relationship with the deceased, if the latter has appointed you as the nominee then the insurance company is duty bound to make payment. Insurance industry experts also suggest that the next of kin could also ascertain whether the passengers are credit-card users. Typically, the personal accident and death insurance cover offered by credit card issuers are huge and could vary anywhere between Rs 2 lakh to Rs 10 lakh.
GIC to be hit with $58 mn
General Insurance Corporation will end up paying a significant chunk of $58m claim arising out of the loss of Air India's aircraft, which crashed in Mangalore on Saturday. The ill-fated flight IX-812, was Air India Express' Boeing 737-800 aircraft bound from Dubai to Managlore.
National Aviation Company of India (Nacil) - the holding company for Air India, Indian and Air India Express - is insured by a fleet of private insurers led by Reliance Capital with HDFC Ergo, Bajaj Allianz and Iffco Tokio General Insurance Company. But as partners, most private companies pass through the risk with international reinsurers and with GIC, also a reinsurer. The consortium of private insurers had wrested the Air India account from state-owned insurers led by New India Assurance following a bidding war. The insurance programme is supported by Mitsui Sumitomo in the international market.
Speaking to ET, GIC chairman Yogesh Lohiya said that the corporation would take a hit of around $6 million because of the crash. GIC has a 14% share in Air India's programme, but has protected its balance sheet through retrocession which is nothing but parking its liability with international reinsurers. It has a net retention, liability on its books, of $6 million.
Although the hull liability for a 737 is expected to be in the region of $58 million, liability claims could take total losses upto $100 million. With the Air India flight being an international one, the liability cover will be as per the Montreal Convention, which is upto 1,00,000 SDRs per passenger.
About 158 of the 169 passengers on board the flight have been killed in the crash. The crash occurred when the plane overshot the runway which was located at the edge of a cliff. A large number of the dead were non-residents from Dubai.
The year has begun on a bad note for the insurance industry and GIC as it has taken three large hits so far. The first was its exposure to the Libyan airliner that crashed earlier this month. This was followed by the sinking of the Aban Pearl a gas exploration rig in the Carribean Sea which was lead insured by ICICI Lombard.
Source : http://economictimes.indiatimes.com/
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