Indian insurers and global reinsurers could face claims up to $120–150 million (about Rs 1,000–1,200 crore) following the tragic crash of an Air India Boeing 787 Dreamliner, according to aviation insurance experts.
“The insured value of the Boeing 787 Dreamliner is between $75–85 million. In aviation insurance, if it is a total loss, then the entire value is payable in full. So, technically, insurers and reinsurers are looking at a payout of $75–85 million in hull insurance alone,” Sourav Biswas, Business Head – Aviation Insurance at Alliance Insurance Brokers, told FE. Hull insurance refers to the coverage for physical damage or loss of the aircraft itself.
Biswas, however, pointed out that since the insured amount is substantial, it is typically not fully covered by Indian insurers. The majority of the risk is reinsured by overseas reinsurers, mainly in the United Kingdom. “The Indian insurer’s losses will be restricted to a maximum of 10% of the total aircraft, while the remaining will come from overseas reinsurers,” he explained.
A senior executive of a state-run general insurer said that the aviation policy is led by TATA AIG General Insurance, backed by Indian co-insurers like GIC Re, The New India Assurance, United India Insurance, and Oriental Insurance. Tata AIG General Insurance did not respond to FE’s request for comments till the press time.
Hitesh Girotra, Vice President – Aviation & Speciality Lines at Prudent Insurance Brokers, says the overall liability to Air India is difficult to assess at this stage. Girotra said the operator’s liability will depend on multiple factors, including the nationality of passengers on board, which will define the minimum liability under the Montreal Convention.
The London-bound aircraft, which plunged into the Meghani area of Ahmedabad, was carrying 242 passengers and crew members on board. Of these, 169 are Indian nationals, 53 are British nationals, 1 Canadian national and 7 Portuguese nationals, according to Air India.
Alliance’s Biswas said that while the hull claim is straightforward to estimate, passenger legal liability and third-party liability are harder to quantify immediately, but the impact on Indian insurers could be significant. “This amount will be decided by the court of law. It may even take 2-3 years,” he added.
Biswas noted that since the aircraft crashed into a civilian area, there is likely to be third-party property damage liability on the operator. There may also have been a loss of lives in the residential building where the aircraft went down. “This will invoke both passenger legal liability and third-party liability,” Biswas said.
Amit Agarwal, CEO & MD of Howden India, says that while interim compensation may be announced by the airline, the final compensation for passengers will be determined under the Montreal Convention of 1999, to which India became a signatory in 2009. “Compensation is calculated using Special Drawing Rights (SDRs), which stood at 128,821 (approx. US$1.33 per SDR) as of October 2024. The actual payout will depend on the coverage purchased by Air India,” he said.
The PSU general insurance executive cited above said that assuming Rs 1 crore in passenger liability to families of deceased will be in excess of Rs 240 crore. “The final settlements, including hull and other liabilities, could be around Rs 1,000-Rs 1,200 crore,” they added.
The general insurance industry recorded a gross direct premium income of Rs 1,097.82 crore in the aviation segment in FY25. Of this, The New India Assurance Co had the largest share at Rs 377.50 crore, followed by The Oriental Insurance at Rs 201.81 crore and TATA AIG General Insurance at Rs 170.02 crore.
In August 2020, Indian insurers and global reinsurers paid Rs 660 crore in compensation for the Air India Express crash at Kozhikode airport in Kerala, which resulted in the deaths of 21 people on board. New India Assurance, one of the primary insurers of Air India at the time, paid Rs 378.83 crore as a hull claim to the airline.