Ahmedabad, June 18: The Air India plane crash that killed 241 people last week is expected to result in insurance claims of around $475 million, potentially becoming the costliest aviation insurance payout in India’s history, according to industry officials.
The wide-body aircraft, which crashed in a densely populated area of Ahmedabad in western India on Thursday, has sent shock waves through the aviation insurance sector, with both domestic and global insurers bracing for significant financial exposure.
“This aviation insurance claim could be one of the biggest in India’s history,” said Ramaswamy Narayanan, chairman and managing director of General Insurance Corporation of India (GIC Re), which is among the firms providing coverage for Air India.
The claim includes an estimated $125 million for the aircraft’s hull and engines, while liability claims for passenger deaths and other damages are expected to reach around $350 million, Narayanan said. The projected total exceeds three times the aviation insurance industry’s annual premium collection in India for 2023, according to data from GlobalData.
The broader financial impact is likely to be borne by international reinsurers, as Indian insurers cede more than 95% of their aviation insurance premiums to global markets. Aviation accounts for just about 1% of Indian insurers’ total premium revenue, limiting domestic exposure.
“Due to the high reinsurance dependence, the financial burden will predominantly fall on international reinsurers, leading to the hardening of the aviation reinsurance and insurance market,” said Swarup Kumar Sahoor, a senior insurance analyst at GlobalData.
The crash involved foreign nationals, and claims related to their deaths may be subject to legal norms in their respective jurisdictions, which could push the total payout even higher, according to people familiar with the matter who declined to be identified.
Insurers are expected to settle the hull and equipment-related claims first, followed by the more complex liability claims, Narayanan said, adding that the latter “will take some time to be resolved.” A spokesperson for Air India did not immediately respond to a request for comment. The crash marks the deadliest in India’s aviation sector in more than a decade.
