Air-India on Thursday secured an insurance cover for its 33 aircraft fleet for around 20 per cent less than the $11.6 million premium paid last year.

A few months ago, Reliance Industries had bought its Rs 40,000 crore (Rs 400 billion) risk policy for Rs 142 crore (Rs 1.42 billion), about 10 per cent less than last year's annual premium of Rs 156 crore (Rs 1.56 billion).

Air-India and Reliance are among the several Indian companies which sought insurance cover overseas to reap the benefits of a softened global insurance market.

The cost of acquiring cover overseas has fallen by 15-20 per cent. Indian companies can seek insurance overseas if domestic insurance firms cannot cover them.

Domestic insurance firms need a greater ability to cover new businesses. So they too buy reinsurance overseas -- and are getting lower premiums now. The National Insurance Company, the second largest domestic insurer, on Thursday finalised its reinsurance programme at a 15-20 per cent lower rate.

"The international insurance market had jacked up premiums after September 11. With no major international losses and excess capacity in the international market, we are today operating in a soft market," says National Insurance Company chairman and managing director H S Wadhwa.

Over 40 per cent of National Insurance's cover has been reinsured with the General Insurance Corporation of India.

The bad news is that the fall in global insurance premiums won't benefit corporates that seek cover in the Indian market.

This is because 65-70 per cent of Indian insurance business continues to be under the tariff regime -- premiums are fixed by the Tariff Advisory Committee, and do not change in line with global trends.

Though most domestic insurers have been able to secure cheaper reinsurance covers, the benefit will not be passed on to all corporates.

If international premiums have tumbled, it's because there have been no major losses after September 11, when the insurance capacity was wiped out. Further, fresh capacity from Bermuda-based companies are also vying for the same business.