Key Points
- Air India’s Ahmedabad crash on June 12 is set to trigger a $475 million (₹4,080 crore) insurance claim the largest in Indian aviation history.
- The crash killed 241 of 242 people onboard and at least 30 on the ground, making it India’s deadliest air disaster in over a decade.
- The insurance claim covers $125 million for the aircraft and engine, and $350 million for loss of life and property.
- Most of the financial burden will fall on global reinsurers, not Indian insurers, due to risk transfer practices.
- Aviation insurance premiums for Indian airlines are expected to rise significantly in the aftermath.
New Delhi: India’s aviation sector is bracing for its highest-ever insurance payout following the catastrophic Air India crash in Ahmedabad on June 12. The incident, involving a Boeing 787-8 Dreamliner bound for London, resulted in the deaths of 241 passengers and crew, with additional fatalities reported in a densely populated residential area struck by the wreckage.
$475 Million Claim: A Historic Payout
According to Ramaswamy Narayanan, Chairman and Managing Director of the General Insurance Corporation of India (GIC), the total insurance claim is estimated at $475 million (about ₹4,080 crore). This figure dwarfs previous aviation claims in India and is more than three times the total annual premium paid by the entire Indian aviation industry in 2023.
Breakdown of the Claim:
- Aircraft and Engine (“Hull”): $125 million (₹1,075 crore) will be claimed for the loss of the aircraft and its engine.
- Liability (Loss of Life and Property): $350 million (₹3,014 crore) is earmarked for compensating the families of passengers, crew, and victims on the ground.
Global Reinsurers Bear the Brunt
Indian insurers, including GIC, have transferred over 95% of their aviation risk to international reinsurers, meaning the bulk of the payout will impact global insurance markets. For Indian insurance companies, aviation premiums represent only about 1% of their total business, so the direct financial impact domestically is limited.
Insurance Premiums Set to Rise
Industry experts warn that this unprecedented claim will lead to higher aviation insurance premiums for Indian airlines, either immediately or during the next policy renewal cycle. The ripple effect is expected to “harden” the insurance market, making coverage costlier and potentially more difficult to obtain.
Compensation for Foreign Nationals
The presence of foreign nationals among the victims could further increase the total payout, as compensation claims will be settled according to the laws of their respective countries. This may involve lengthy cross-border legal proceedings.
Claims Process and Timeline
The settlement process will begin with the hull claim for the aircraft, followed by the more complex liability claims for loss of life and property a process expected to take several months. The Montreal Convention, to which India is a signatory, governs compensation for international air disasters, ensuring a two-tier liability system for passenger deaths and injuries.
The Air India crash in Ahmedabad stands as a grim milestone in Indian aviation, not only for its tragic human toll but also for its financial repercussions. With a $475 million insurance claim set to reshape the industry, Indian airlines and global reinsurers alike are preparing for a new era of higher premiums and stricter risk assessments.
