New India Assurance and Tata AIG are likely the key domestic insurers for the Air India plane that crashed shortly after takeoff from Ahmedabad’s Sardar Vallabhbhai Patel International Airport while en route to London, according to sources familiar with the matter.
According to reports, Air India secured a $20 billion insurance cover for its fleet, which now includes over 300 aircraft following the merger with Vistara. The premium for this coverage remains at approximately $30 million, consistent with the $30 million (Rs 246 crore) paid in the 2023-24 financial year, despite the increased sum assured from $10 billion to $20 billion.
The plane was a Boeing 787-8 Dreamliner, one of the most modern passenger aircraft in service.
Typically, for large aviation risks such as this, domestic insurers retain a minimal share and transfer significant exposure to global reinsurance markets.
Around 5 percent of the hull claim will likely be ceded to India's GIC Re as a part of the mandatory domestic reinsurance requirement, while the remaining bulk of the risk is likely to be reinsured internationally, with AIG London likely to lead the program, sources indicated.
Insurance payouts in such cases are categorised under two main heads: Hull insurance and passenger liability.
The hull claim, which refers to the compensation the airline received is often equivalent to the aircraft's market value. In this case, the aircraft hull alone can be valued between $200 to $300 million, and liability coverage, especially for flights operating in or to regions like Europe—typically exceeds $500 million, said Narendra Bharindwal, President, Insurance Brokers Association of India (IBAI).
Passenger liability in such cases falls under third-party liability insurance, which covers compensation for death, injury, and baggage loss in line with the Montreal Convention and India’s Carriage by Air Act.
Under the Montreal Convention and India’s Carriage by Air Act, airlines are liable to compensate families of passengers who are killed or seriously injured. The amount can vary significantly based on age, occupation, and court rulings.
The aircraft was carrying 242 people, including 12 crew members.
While authorities have yet to confirm fatalities, Commissioner G S Malik has told the Associated Press that there are no survivors in the plane crash, according to reports circulating online.
However, a similar incident took place in Kozhikode in 2020, where an Air India Express Boeing 737 crashed on landing and resulted in 21 casualties. The insurance payout for passengers in that case was estimated at around $38 million under passenger liability coverage.
Compensation was determined based on various factors including the passengers' age, income, and legal claims filed by the families, as per provisions of the Montreal Convention and India’s Carriage by Air Act.
[This is a developing story, please check back for more updates]
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