Crew claims of AI crash stuck over broker error

Written by Sitanshu Swain | Shaheen Mansuri | Mumbai | Updated: Mar 4 2011, 07:41am hrs
A bitter dispute has cropped up between national carrier Air India on one side and the Anil Ambani-owned Reliance General Insurance and broker Marsh India on the other over the settlement of claims for the seven crew members of the Dubai-Mangalore Flight B737 that crashed on May 22, 2010, at the Mangalore airport, killing 158 passengers and all crew members.

While the claims of the passengers are in the process of being settled by the insurance providers, claims of crew members are still unpaid, because of a major oversight on the part of the insurance broker.

The families of the seven crew members are eligible for a total of $1.7 million (around R7.65 crore) as their insurance claims. But whether they will get this money is now in doubt.

According to industry sources, in a major oversight on the part of Marsh, the insurance provider which was helping Reliance General place the $8-billion reinsurance deal for the AI contract in the London market, where Mitsui was the lead reinsurer, did not ensure that a separate policy for AI's crew members was also issued.

AI now claims that it has an oral confirmation from insurance providers Reliance General and Marsh about the cover for the crew as a matter of normal practice. But actually, the insurance providers had not bought any cover for the crew. However, AI, after taking due legal advice, insists that the insurance provider should settle the claims on account of the crew.

The matter has reached the parliamentary standing committee on aviation, which criticised the delay in claim settlement at a recent meeting. The committee also asked AI to take action against Reliance General and Marsh India.

AI has informed the insurance providers that unless they settled all the claims of the crew members immediately, the ministry of civil aviation would be compelled take action against them.

Responding to a query from FE, a Reliance General spokesperson said: The insurers have already paid complete hull claim and settled passenger claims of the AI flight that crashed in Mangalore. A few pending negotiations are in progress and these will be settled shortly.

However, when FE asked AI specifically about the status of the claim settlement of crew members, the airline's chief information officer Kamaljeet Rattan preferred to talk only about the claim settlement of passengers, which had anyway been happening smoothly.

The fact is that most of the cases have been handled to the satisfaction of the victims' families and compensation paid as per norms national and international. There are a few cases yet to be settled. At the moment, the matter is sub-judice. AI would honour court directives on such cases, said Rattan.

George Abraham, general secretary of the Aviation Industry Employees' Guild, a recognised union of former AI employees, said after the incident that Rs 12 lakh was immediately disbursed to the families of the deceased cabin crew members as an interim relief and the airline wanted to settle the rest within 3-4 months of the air crash. I have been pursuing the matter with the management and hopefully the claim will be settled soon, he said.

AI, in a controversial decision, had opted for the consortium of private companies led by Reliance General Insurance over public sector general insurers to cover its fleet of 136 aircraft for a total sum assured of $8.59 billion in September 2009. Although AI had approved a premium of $24.3 million quoted by Reliance General Insurance for placing the deal in the London market, it had to pay another $3 million to complete the placement of reinsurance deal.