New India Assurance and Tata AIG are expected to be the primary Indian insurers for the Air India aircraft that crashed after takeoff from Ahmedabad’s Sardar Vallabhbhai Patel International Airport during a flight to London.
Insurance Coverage for the Fleet
Following its merger with Vistara, Air India has secured a $20 billion insurance cover for a fleet of over 300 aircraft. Despite the increased coverage, the annual premium remains at $30 million—same as in FY 2023–24. Previously, the coverage limit was $10 billion.
Aircraft Details
The crashed aircraft was a Boeing 787-8 Dreamliner, considered among the most advanced in global commercial aviation.
Reinsurance Distribution and Global Exposure
Indian insurers typically retain only a small portion of large aviation risks. The majority is transferred to international reinsurers. GIC Re is expected to handle about 5% of the hull insurance under the domestic reinsurance mandate, while the remaining risk is likely to be reinsured globally. AIG London is expected to lead the global reinsurance program.
Types of Insurance Payouts
Payouts in major aviation accidents are classified into:
- Hull Insurance – covers the value of the aircraft.
- Passenger Liability – covers compensation for passengers as per international conventions.
Estimated Claim Values
The Dreamliner’s hull value is estimated at $200–300 million. Liability coverage for international routes, particularly to Europe, often exceeds $500 million, according to Narendra Bharindwal, President of the Insurance Brokers Association of India (IBAI).
Passenger Liability Explained
Passenger compensation falls under third-party liability. This includes:
- Death or serious injury.
- Baggage loss.
These are governed by the Montreal Convention and India’s Carriage by Air Act. Compensation varies based on factors like age, income, and legal rulings.
Casualty and Precedent
The aircraft was carrying 242 people, including 12 crew members. Though official confirmation of fatalities is pending, reports suggest there are no survivors, according to Commissioner G S Malik.
A similar case occurred in Kozhikode in 2020, where an Air India Express Boeing 737 crash resulted in 21 deaths. Passenger liability payouts then were estimated at around $38 million.
Basis of Compensation
Passenger payouts are typically determined by:
- Age and income of victims
- Legal claims raised by families
- Applicable international and Indian aviation laws
