NEW DELHI: Air passengers, who often have to fork out substantial sums due to cancellations, are now in for a pleasant surprise. Insurance companies, which have found new business opportunities in flight delays and cancellations, are now offering low-premium travel insurance policies covering cancellations, baggage loss, delay in flights, etc.

Tata AIG, for example, offers a travel insurance called Domestic TravInsure to online SpiceJet customers. The company is in the process of brokering similar arrangements with other airlines.

“The gap between infrastructure requirement to sustain growth was an opportunity to insure passengers on problems accompanied in any low-cost airline market,” Tata AIG General Insurance Company’s head (travel insurance) Khalid Sohail said. So one quarter which is benefiting from flight delays and inadequate airport infrastructure is insurance companies.

With airports under strain to accommodate thousands of passengers every day, loss of baggage and flight delays are events that can be insured. The idea is to address the inconveniences experienced during travel, Mr Sohail said. The policy is valid for 30 days from the time a passenger takes the flight and covers travel by all modes of transportation during this period.

The insurance policy can be bought seamlessly at the click of a mouse in a single transaction after a customer buys the ticket online. The company studied the low-cost travel market for three years before arriving at the premium amount. With a market as price sensitive as India, keeping the premium low was important, a company official said.

The product is driven by technology by integrating the booking engine of the airline and the policy part of the insurance company. While the company expected a 5% convergence rate, implying that 5% of the customers buying tickets will also buy the policy, it ended up registering a 30% rate instead. Over 3,000 bookings are made through the SpiceJet web site.

The number of air passengers has jumped from 15 million a few years ago to over 60 million now, of which 40% fly low-cost carriers. The existing domestic travel insurance products are fundamentally accident and death cover products that are sold across airport counters and are valid only for the duration of the flight.

The policy offers an array of insurance covers for SpiceJet passengers, including round-the-clock accidental death and dismemberment, emergency accidental medical reimbursement, emergency medical evacuation and repatriation of the remains, 24-hour emergency assistance service, trip cancellation, trip interruption, etc.

Certain benefits, such as trip cancellation, begin right from the time the policy is bought and covers the passenger against cancellation of tickets under specific circumstances like hospitalisation and death of passenger, his co-passengers or their family members.

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