Thiruvananthapuram: Air-India has begun the process of renewing the aviation insurance policy for Air-India and Air India Express, which is due for renewal from July 1.

The national carrier has invited bids from public and private insurance companies for renewing the policy. Four public sector companies and eight private sector companies are in the fray to bag the insurance cover this year, a top AI official at the airline headquarters in Mumbai told The Hindu .

The AI insurance cycle runs from July 1 to June 30. A consortium of public sector insurance companies led by New India Insurance had bagged the contract last year. Ninety per cent of the risk was placed in the International Lloyd's market, the official said.

The average fleet value of the national carrier is estimated to be $ 3.5-4.5 billion with AI's massive fleet acquisition programme on. Its fleet is likely to go up from the existing 48 to 59 by 2007-end. The official said the national carrier estimated an excess of five billion passengers in Air-India and Air India Express, the low cost carrier, during July 2007-June 2008 period.

"We expect competition from the private sector insurance companies this year. To encourage private sector insurance firms, we have decided to shortlist two companies," according to an AI official.

Air-India has listed several criteria for those participating in the technical bidding process. It includes understanding of aviation insurance, domestic and international market, experience of aviation/insurance and reinsurance in the international market, company's credentials and financial strength, among other things.

In the case of companies submitting joint bid, the companies should name the frontline company and produce a letter to that effect. In the case of joint bids, the combined strength of the insurance companies would be taken into consideration for the purpose of technical assessment.

As per a directive from the Union Ministry of Finance, no purchase preference/support will be provided to public sector insurance companies.

Last year, the private sector insurance companies that were in the race to be appointed insurers could not cross the technical evaluation stage. The companies were unable to meet the technical qualification on net worth, claim settlement and some even for their knowledge of the aviation sector.

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