Air India Crash May Leave Over $120M Dent in Insurers’ Pockets

The tragic Air India Ahmedabad plane crash on Thursday, which took the lives of 241 passengers and crew members onboard, is likely to result in the costliest aviation sector insurance claim. The Tata Group airline might have to pay an insurance claim of over $120 million. The insurance liability for Air India could be significantly higher given the presence of a few high-networth passengers onboard, the Economic Times reported. 

“This would be one of the biggest-ever claims involving an Indian airline,” aviation head at Alliance Insurance Brokers, Sourav Biswas, told the Economic Times. 

The liability per passenger could be around $250,000, depending on the bodily injury or bodily injury leading to death.

Also Read: Boeing “Gathering More Info” on Ahmedabad Plane Crash, Shares Plunge In Pre-Market

Who Will Pay ? 

While Tata AIG was the lead insurer, others like New India Assurance had written part of the policy. The aircraft AI171 was reportedly covered under a global reinsurance programme, placed in the London market. Most of the insurance liability is likely to be passed on to the international reinsurers. 

Indian insurers, including Tata AIG, New India Assurance, National Insurance, United India, Oriental and ICICI Lombard General, have held less than 10% of the risk. On the other hand, state-run reinsurer GIC Re has 5% on the reinsurance treaty and will reportedly see a claim of about $4.1 million. 

“... Such losses generally affect multiple reinsurers, as airline fleet policies are often placed on a facultative basis involving several participants. Since liability claims take time to quantify, it is currently difficult to asses the impact on future pricing,” said CMD of GIC Re, Ramaswamy Narayanan, according to ET. 

The lead insurer for Air India, Tata AIG, spokesperson reportedly said the company is closely tracking the development. 

Additionally, the Ahmedabad plane crash is likely to impact reinsurance rates across the board given the fact that aviation insurance involves global participants. Hence, any large loss in one part of the world is bound to impact pricing globally.