The June 12 Air India crash, which killed all 242 people on board but one, has raised concerns about a rise in travel insurance premiums but industry experts don’t expect a significant change in the immediate term.
Travel insurance demand is primarily driven by coverage for sickness abroad rather than air-crash incidents, Hari Radhakrishnan, an expert from the Insurance Brokers Association of India (IBAI), said. “Air crashes are extremely rare events,” he said. “They don’t happen frequently enough to warrant an immediate increase in rates. For one-off events like this, no significant adjustments are typically made.”
For individual travellers, the outlook remains steady, Sourav Biswas of Alliance Insurance Brokers said. International travel insurance, which includes comprehensive coverage for flight accidents, medical evacuations and trip cancellations, may see a moderate spike, he said.
Given the global nature of the Air India incident (involving UK, Portuguese and Canadian possibly US nationals), the risk recalibration and pricing impact will be a little more prominent on international policy segments, Biswas said.
Domestic travel insurance, with its lower coverage limits and fewer cross-border liabilities, is likely to experience a more subdued impact.
International and domestic travel insurance are entirely different in terms of risk, coverage, and scope. International policies involve multiple countries and complex claims processes, so they may see some adjustment.
Domestic policies, however, are less affected by such incidents.
This trend is supported by the fact that aviation insurance premiums in India are quite low and highly competitive. The entire sector is valued at only Rs 1,000 crore annually, Biswas said, which is relatively underpriced given the scale of potential losses.
A market correction in pricing is therefore anticipated, both at the airline and, although moderately, individual travel policy level as well, he said.
In one of India’s worst aviation disasters, Air India’s London-bound flight, with 242 people on board, crashed in a residential area of Ahmedabad shortly after takeoff on June 12 afternoon.
A male passenger miraculously survived the crashed, the first involving a Boeing 787-8 Dreamliner, which slammed into a medical college hostel building. Reports say 24 people, including four medical students, were killed on the ground.
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