Ahmedabad Plane Crash: According to a Bloomberg report, the Air India plane crash that occurred in Ahmedabad on June 12—one of the worst aviation disasters in India’s history—is also shaping up to be one of the country’s most expensive aviation insurance claims, estimated at around $475 million (approximately ₹4,080 crore).
The report cites Ramaswamy Narayanan, Chairman and Managing Director of General Insurance Corporation of India, stating, “This aviation insurance claim could become the largest in India’s history.” General Insurance Corporation is one of the companies providing coverage to Air India.
Breakdown of Insurance Claims
Ahmedabad Plane Crash: Narayanan elaborated that out of the estimated $475 million, approximately $125 million (around ₹1,075 crore) is expected to cover damage to the aircraft’s hull and engines. The remaining $350 million (roughly ₹3,014 crore) is expected to go toward additional liability claims related to the loss of life of passengers and others, according to the report.
According to Narayanan, the hull claims will be settled first by insurance companies, while settlement of the liability claims will take more time.
Ahmedabad Plane Crash: GlobalData reports that the total estimated claim amount is nearly three times the total aviation insurance premiums paid by the Indian aviation industry in 2023.
A Financial Blow to the Global Insurance Market
This tragedy is likely to impose a significant financial burden on the global aviation insurance and reinsurance markets. It could also lead to increased insurance premiums for Indian airlines. Citing people familiar with the matter, the report notes that aviation insurance premiums in India are expected to rise soon, or when policies come up for renewal.
In the case of the Air India crash, the total insurance cost could increase further, as many of the victims were foreign nationals. In such instances, compensation is typically calculated according to the laws of the victims’ home countries, the report added, quoting sources who spoke on condition of anonymity.
Major Impact on Global Reinsurers
Ahmedabad Plane Crash: According to GlobalData, the impact of this massive insurance settlement on the Indian insurance sector will be limited. The two Indian companies involved earned just 1% of their total premiums from aviation insurance, and most of the risk has been transferred to global reinsurance firms. The Bloomberg report mentions that Indian insurance companies have ceded more than 95% of their aviation direct written premium (DWP) to global reinsurers.
As per Swaroop Kumar Sahoor, Senior Insurance Analyst at GlobalData, “The financial burden will fall mainly on international reinsurance companies, which could lead to hardening in the aviation reinsurance and insurance markets.”
Details of the Tragic Crash
Ahmedabad Plane Crash: Air India’s Boeing 787 Dreamliner crashed just 33 seconds after taking off from Ahmedabad airport on June 12. The aircraft was carrying 242 people, of whom 241 lost their lives. Additionally, around 30 people who were not on board also died when the aircraft crashed into a residential area and a hospital hostel building.
The tragedy has sent shockwaves not only across India but around the globe, as many of the victims were foreign nationals. Experts are now working to uncover what exactly went wrong.
Impact on the Global Insurance Market
The financial impact won’t be limited to India. According to GlobalData, more than 95% of aviation premiums collected by Indian insurers are ceded to global reinsurers. This means international reinsurance firms will bear the brunt of the payout, which may harden global aviation insurance markets and increase premium costs for Indian airlines in future renewals.
Industry experts suggest that insurance costs for Indian carriers are likely to rise significantly, especially as many of the victims were foreign nationals. In such cases, compensation is often calculated under the laws of their respective home countries, increasing the potential liability.
Ahmedabad Plane Crash: Looking Ahead
This tragedy has shaken not only India but the entire world. As investigations continue, experts are working to determine the cause of the crash and ensure accountability. Meanwhile, the enormous insurance implications of the incident underscore the broader financial vulnerabilities in aviation, especially during rare but devastating events like this.