Air India crash to be India’s costliest aviation insurance claim, Bloomberg reports

Dubai: India is staring at one of its biggest-ever aviation insurance claims following the deadly Air India crash in Ahmedabad that killed 241 people and others on the ground, Bloomberg reported, citing industry sources and insurance data.

The total insurance payout is estimated to reach as high as $475 million, making it the costliest aviation-related loss in the country in over a decade.

According to a Bloomberg interview with Ramaswamy Narayanan, Chairman and Managing Director of General Insurance Corporation of India, the insurance claim for the aircraft’s hull and engines alone is expected to be around $125 million.

In addition, liability claims related to the loss of life—covering both passengers and victims on the ground—could reach approximately $350 million.

The estimated $475 million payout is more than three times the total annual aviation premium collected in India in 2023, according to data from GlobalData cited by Bloomberg.

The scale of the financial fallout is expected to reverberate across the global aviation insurance and reinsurance industry, with likely consequences for domestic carriers in the form of higher premiums at the next renewal cycle.

The report notes that insurers typically process the hull claims first, with liability settlements taking longer. “It will take some time for liability claims to be settled,” Narayanan told Bloomberg, adding that foreign victims will trigger cross-border legal proceedings, as compensation will be subject to the laws in their respective countries.

While Indian insurers such as GIC Re are involved, the bulk of the financial impact is expected to be absorbed by international reinsurers. Bloomberg, citing GlobalData insights, reported that Indian insurance companies cede over 95% of their aviation insurance premiums to global reinsurers.

This heavy reliance on international partners means the domestic market may avoid major financial strain, even as global underwriters take the hit.

“The financial burden will predominantly fall on international reinsurers, leading to the hardening of the aviation reinsurance and insurance market,” said Swarup Kumar Sahoor, senior insurance analyst at GlobalData, in a statement quoted by Bloomberg.

As of now, Air India has not issued a public comment on the insurance claim, according to Bloomberg.

The Air India tragedy is expected to drive up aviation premiums in India, whether immediately or during annual renewals, the report concluded, particularly as global reinsurers adjust pricing models in the wake of the large-scale loss.