HAL Makes US$39 Million Insurance Claim For Sukhoi Crash

In a first, India’s state-owned general insurer New India Assurance (NIA) will have to shell out INR 273 crore ($39 million) for an under-production Sukhoi jet that recently crashed during its test flight near Nashik, Maharashtra. 

This is the largest insurance claim in the aviation sector for Indian insurers involving a fighter jet.

NIA will have to meet as much as 90-95 per cent of the claims made by Hindustan Aeronautics Limited (HAL) as such projects are heavily reinsured abroad, The Indian Express reports.  The policy covers manufacturer liability arising from accidents or incidents before it is handed over to the air force.

While defence and military projects and materials are not insured, HAL has insured the Sukhois as they are in an under-production stage and these jets are yet to be inducted into Indian Air Force, an NIA official was quoted as saying.

During 2017-18, NIA was the sole primary insurer for the Sukhoi project with a total sum assured of Rs 11,240 crore. State-owned GIC Re is the lead reinsurer for the deal which is shared with other reinsurers in the international markets, insurance sources said.

Officials said INR 258 crore is for the crashed fighter aircraft and rest is to be paid to the third parties affected by the crash. Though the total exposure of the NIA for the crashed Sukhoi is at around INR 20.43 crore, the net losses for the largest domestic general insurer will be around INR 13.71 crore as the rest will be paid by the reinsurers, said an official.

HAL has paid a premium of around Rs 18-19 crore during the year and may have to shell out 20 per cent higher premium next year due to the Nashik claim, officials said.

The Sukhoi Su-30MKI twinjet fighter of HAL — meant for all-weather, air-to-air and air-to-surface missions — awaiting induction in the Indian Air Force had crashed around 25 km from Nashik, shortly after taking off from the HAL airstrip near the city.

There were no human casualties as both the pilots ejected safely before the crash, which was on a routine sortie, hit ground near a grape farm. Some labourers, working in the field where the aircraft crashed, were reportedly injured after being hit by splinters.