The tragic crash of an Air India flight in Ahmedabad has led to estimations that it will result in India's costliest aviation insurance claim. With an estimated claim amount exceeding $120 million, this incident is set to break previous records in the country's aviation history.
The hull loss alone is pegged at around $80 million, while passenger liability could range between $30-$100 million.
The crash is likely to have far-reaching consequences, not only for Indian aviation insurers but also for global aviation insurance markets, especially in India.
The hull loss is the portion of the insurance claim related to the aircraft’s insured value and is expected to be one of the largest payouts in Indian aviation. Air India’s aircraft is valued at around $80 million, which will be covered by the insurer. In addition to this, the passenger liability component could add another $30-$50 million to the total claim. Given that the aircraft had high-net-worth passengers onboard, some estimates suggest the passenger-related claims could be as high as $100 million.
The insurance for the Air India aircraft was primarily provided by Tata AIG as the lead insurer, with other insurers such as New India Assurance and several Indian public sector insurers participating in the policy. However, much of the risk was transferred to global reinsurers through a reinsurance programme placed in the London market.
As a result, Indian insurers like Tata AIG, New India Assurance, and others have retained only a fraction of the risk, with estimates suggesting they hold less than 10% of the total liability. The majority of the claim will be absorbed by global reinsurers.
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India has witnessed several major aviation accidents in the past, although such incidents have been rare. For instance, a crash involving a Boeing 737 operating from Dubai in 2010 resulted in a payout of approximately $60-$70 million for the Mangalore crash. Similarly, the 2020 Kozhikode crash led to a combined insurance payout of around $60-$70 million as well.
However, the current Air India crash is expected to exceed these figures, making it the largest claim in India’s aviation history. With the total payout potentially surpassing $120 million, this event is set to be a milestone in the Indian aviation industry.
The aviation insurance policy for Air India is typically renewed annually on April 1st, with Tata AIG taking over as the lead insurer since the airline's privatisation. Previously, New India Assurance had taken a leading role in the policy placement. Following the crash, Tata AIG is closely monitoring the situation and working alongside global reinsurers to process the claim.
With the liability limit for Air India's aviation insurance set at up to $1.5 billion, the company is well-positioned to manage such significant claims. However, industry experts believe this will affect future policy renewals, leading to higher premiums for the airline.
The Air India crash is expected to trigger India’s costliest aviation insurance claim, surpassing $120 million. With the hull loss estimated at around $80 million and passenger liability ranging from $30-$100 million, this tragic event will have far-reaching consequences for Indian aviation insurers and the global insurance market. The incident will likely influence future aviation insurance premiums, especially in India, where such claims are relatively rare.
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Published on: Jun 13, 2025, 1:35 PM IST
Team Angel One
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