Air crash involving Air India results in projected insurance payouts totaling approximately $609 million.
Air India Plane Crash to Strike Hard on Global Aviation Insurance
In the wake of the shocking Air India plane crash that claimed 241 lives, the global aviation insurance sector is bracing for a massive financial hit. The looming claim, approximately US$475 million, could potentially mark one of India's largest ever insurance payouts.
Mr. Ramaswamy Narayanan, Chairman and Managing Director of the General Insurance Corporation of India, one of the two insurers covering Air India, sheds light on the revelations, stating, "This aviation insurance claim could be one of the biggest in India's history."
The initial aircraft hull and engine claims amount to around US$125 million, according to Narayanan, with further liability claims for loss of life and others expected to reach US$350 million. This combined sum surpasses the annual premium for the entire Indian aviation sector in 2023 by a wide margin.
The lingering financial shockwaves will ripple through the entire worldwide aviation insurance and reinsurance market, and could push up insurance costs for airlines in India.
Insurance rates across the aviation sector in India might increase, either now or during the renewal of policies, as suggested by industry insiders. As the crash involved foreign nationals, overseas claims will be calculated according to the applicable laws in their respective jurisdictions, according to these sources who prefer to remain anonymous discussing confidential matters.
Neither Air India, nor a spokesperson from the company, has commented on the matter as of yet.
Insurance companies will handle claims in an orderly fashion - settling the plane hull claims first, followed by the more complex liability claims. "It will take some time for liability claims to be settled," iterates Narayanan.
The domestic market's financial blow may be partially cushioned by the fact that both insurers contributed only around 1% of their total premium from aviation, largely transferring the risks to global reinsurers.
Due to this, as per GlobalData senior insurance analyst Swarup Kumar Sahoo, "the financial burden will predominantly fall on international reinsurers, leading to the hardening of the aviation reinsurance and insurance market."
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Air India crash Insurance disaster Aviation industry
Enrichment Data:The plane crash of Air India on June 12, 2025, may result in insurance and reinsurance claims exceeding $475 million. Highlights include:
- Aircraft Value: The aircraft involved was valued between $75 million and $80 million.
- Reinsurance Market: The event may lead to stricter terms and higher premiums for airlines due to the hardening of the aviation reinsurance market.
- Liability Exposure: Potential compensation per passenger under the Montreal Convention is approximately $213,000 (151,800 SDRs), totalling over $40 million.
- Global Financial Burden: The domestic aviation insurance market in India generated $127.8 million in 2023. With this incident's claims potentially exceeding the entire annual domestic premium, international reinsurers are expected to assume the majority of the financial burden.
Additional considerations include potential unlimited liability if negligence is discovered, as well as compensation announcements from Air India. The total financial impact will likely augment costs for airlines and reinsurers globally, impacting the aviation insurance market's pricing and risk assessment strategies.
- The aviation insurance and reinsurance market might experience a hardening, as the financial burden from the Air India plane crash may predominantly fall on international reinsurers due to the claims exceeding $475 million.
- Following the Air India plane crash, liability claims, particularly those for loss of life, could result in insurance rates across the aviation sector in India increasing, either now or during the renewal of policies.
- The insurance disaster caused by the Air India plane crash may cause accidents to be a significant focus in the general-news category and crime-and-justice sectors, as the event could lead to changes in aviation insurance and reinsurance policies, potentially affecting the entire aerospace industry.
