Air India Disaster: Insurers Could Reportedly Face Historic Crash Payout Of Up To $475M

The fatal Air India crash in Ahmedabad could set off one of the costliest insurance claims in India’s history at about $475 million, according to a Bloomberg report.

The claim for the aircraft hull and engine is estimated at around $125 million, Bloomberg News reported, citing Ramaswamy Narayanan, chairman and managing director at General Insurance Corporation of India.

Narayanan, whose company is one of the firms that provides insurance to Air India, reportedly estimated that additional liability claims for loss of life for passengers and others will be around $350 million.

The reported insurance claim, which Narayanan dubbed as one of the “biggest in India’s history,” will be more than triple the annual premium for the aviation industry in India in 2023, according to British firm GlobalData.

The Air India AI-171 Boeing Dreamliner aircraft, which crashed into a densely populated neighborhood moments after takeoff, resulted in the deaths of almost all on board, as well as others at the place of impact.

Since the crash on Thursday, Boeing stock has slipped 5.7%.

As per the Bloomberg report, citing people familiar with the matter, insurance premiums in India across the aviation industry will rise, either now or at the time of policy renewals.

The total Air India insurance payout could rise even further, as per the report, as the crash killed several foreign nationals, and those claims will be calculated according to the rules in their respective jurisdictions.

Narayanan reportedly said that insurers will first settle the hull claim, followed by liability claims. The entire process is expected to take “some time,” according to the report.

GlobalData has stated that the impact on domestic insurers will not be significant, as they have ceded more than 95% of their aviation insurance direct written premiums (DWP) to global reinsurers, which could also tighten global aviation insurance markets.

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