The recent Air India Boeing 787 Dreamliner crash near Ahmedabad is poised to trigger one of India's largest aviation insurance claims, estimated to be around $475 million (₹39.4 billion). The incident, which claimed the lives of 241 people on board, marks India's deadliest plane crash in over a decade and is sending shockwaves through the global aviation insurance industry.
Ramaswamy Narayanan, Chairman and Managing Director at General Insurance Corporation of India, has indicated that this claim could be one of the biggest in India's history. The financial repercussions of the crash are expected to affect the entire global aviation insurance and reinsurance market, potentially leading to increased insurance costs for airlines in India.
The insurance claim comprises several components. The hull value of the Boeing 787-8 Dreamliner, delivered in 2013, is estimated between $75 million and $80 million. Additional liability claims for loss of life for passengers and others are projected to be around $350 million (₹29.23 billion). These accumulated costs are more than triple the annual premium for the aviation industry in India in 2023.
The insurance coverage for Air India is structured with Tata AIG General Insurance as the lead insurer, holding a 48% share. Other co-insurers include New India Assurance (34%), ICICI Lombard (10%), and National Insurance and United India Insurance (1%) each. The remaining 6% is distributed among other insurers. Due to the high value of the claim, reinsurers are expected to absorb a majority of the payout, while direct insurers will retain exposure based on their share in the risk pool.
The Life Insurance Corporation of India (LIC) has stepped in to ease the burden on the families of the victims by relaxing documentation requirements for insurance policy claims. Any evidence in government records of the death of the policyholder or compensation paid by Central/State government/airline authorities will be accepted as proof of death in lieu of death certificates.
GlobalData reports that the fatal crash is expected to harden the aviation reinsurance market. Reinsurers are likely to reassess risks related to wide-body aircraft, adjust pricing models, and impose stricter terms. Swarup Kumar Sahoo, Senior Insurance Analyst at GlobalData, noted that domestic aviation insurance direct written premium (DWP) stood at $127.8 million in 2023, and claims from this single event could potentially exceed the entire domestic annual premium for the aviation market in India. As domestic insurers have been ceding more than 95% of their aviation insurance DWP to global reinsurers, the financial burden will predominantly fall on international reinsurers, leading to the hardening of the aviation reinsurance and insurance market.
According to industry sources, the aircraft was covered under a $20 billion aviation insurance program that spans more than 300 aircraft across the Air India and Air India Express fleets. The policy covers hull damage, public liability, and travel-related risks. Under international aviation conventions, there is no cap on public liability, and compensation amounts are typically determined through court proceedings based on the victims' nationalities and the specifics of each case. Compensation demands could range between ₹2 crore and ₹5 crore per person or more, depending on legal arguments presented.
The accident has intensified scrutiny on fleet insurance adequacy, especially as the International Air Transport Association's 2024 report highlights rising global aviation premiums, a trend likely to escalate post-incident. The government is also considering grounding the Boeing 787-8 Dreamliner fleet, which could increase business interruption claims and directly impact insurers' profitability.
