An Air India Boeing 787 Dreamliner crashed just seconds after takeoff from Ahmedabad Airport on June 12 with 242 people onboard, out of which, 241 people died.
The Air India plane crash in Ahmedabad on June 12, one of the worst in India’s aviation history, is also headed towards one of India’s costliest aviation insurance claims estimated to be around a staggering $475 million, which is around ₹4,080 crore, reported Bloomberg.
“This aviation insurance claim could be one of the biggest in India’s history,” the report quoted Ramaswamy Narayanan, chairman and managing director at General Insurance Corporation of India, as saying. The insurance firm is among the ones that provided coverage for Air India.
Insurance claim breakdown
Breaking down the huge sum of estimated insurance claims, Narayanan said that out of $475 million, around $125 million or ₹1,075 crore is estimated to be that for the aircraft hull and engine and the rest $350 million, or ₹3,014 crore, for the additional liability claims for loss of life for passengers and others, the report said.
According to Narayanan, the hull claim will be settled first by the insurers and the liability claims will take some time to be settled.
The total amount is over three times what the Indian aviation industry paid in total insurance premiums in 2023, according to GlobalData.
The financial burden of the tragedy is set to hit the market of global aviation insurance and reinsurance. It could also make insurance costlier for Indian airlines. Following the crash, the insurance premiums in India’s aviation sector are expected to go up soon or when the policies are renewed, said people familiar with the matter, the report said citing people familiar with the matter.
For the Air India crash, the total insurance buyout could rise further since several of the victims were foreign nationals and in such cases, the compensation will be calculated according to the laws in their home countries, the people said on condition of anonymity.
Bloomberg reached out to an Air India spokesperson for a comment, however, there has been no immediate reply.
Most burden to fall on global insurers
The impact of the big insurance settlement on India’s insurance industry will be limited as the two companies involved earned only about 1% of their total premiums from aviation and had passed most of the risk on to global reinsurers, according to Global Data. Indian insurers have offloaded over 95% of their aviation insurance direct written premium, or DWP, to global reinsurers, said the Bloomberg report.
Because of that, “the financial burden will predominantly fall on international reinsurers, leading to the hardening of the aviation reinsurance and insurance market,” according to Swarup Kumar Sahoor, senior insurance analyst at GlobalData.
An Air India Boeing 787 Dreamliner crashed just 33 seconds after takeoff from Ahmedabad Airport on June 12 with 242 people onboard, out of which, 241 people died. Furthermore, around 30 people who were not on the plane died as it crashed at a residential area and also into the hostel building of a hospital. The tragedy sent shockwaves not across India but around the world as several victims were foreign nationals. Experts now trying to figure out what went wrong.
