Premium rates and terms tighten for aviation sector post Air India crash: Deepak Kumar, Aviation Reinsurance Head, Tata AIG

Edited excerpts:

How has the Indian aviation insurance market evolved compared to mature markets, in terms of capacity, pricing, and claims handling?

Globally, aviation insurance is quite different from other segments because the number of airlines and aircraft doesn’t increase endlessly. In India too, the number of players has remained broadly constant, though some new entrants like Akasa have emerged and a few airlines have exited.

What is driving growth now is India’s strong economy, rising passenger traffic, and large aircraft orders from leaders like Indigo and Air India. Both have placed massive orders with Boeing and Airbus. From an insurance standpoint, this is a high-value sector.

Aircraft values typically range between $100 million and $300 million, while third-party liability limits can be anywhere from $500 million to $1.5 billion, depending on whether the airline operates domestically or internationally. Because of these very high sums, Indian insurers like insurers globally rely heavily on reinsurers for both capacity and technical expertise. London remains the dominant reinsurance hub for aviation, as reinsurers there bring deep experience in handling large claims. In India, the overall aviation insurance premium pool is about Rs 800–1,000 crore, while a single accident can easily run into thousands of crores. This imbalance makes reinsurance indispensable.

How is climate change shaping aviation underwriting in India?

At present, we don’t have enough data to directly correlate climate change with aviation accidents. The industry is highly regulated, and airworthiness audits are rigorous. However, there are some early signs such as more turbulence in the air, heavier and more concentrated rainfall affecting runways, and possible implications for take-offs and landings. Right now, these are observations. Over the next three to five years, once we have more data, climate-related considerations may start influencing underwriting.

Coming to the recent Air India crash, what is the likely payout?

The process is similar to any other reinsured program. Tata AIG, as the lead insurer, will pay Air India and then recover from global reinsurers. The aircraft hull claim, roughly the insured value of the plane, is settled relatively quickly. In this case, it’s in the range of $82 million. Liability, however, takes longer, especially since foreign nationals are involved. There will likely be legal proceedings, and settlements will depend on those. We are yet to evaluate the total claim for the crash.

Some assume the hull claim payout is delayed until the cause of crash is known. Is that true?

The cause does play a role in determining whether the hull loss falls under an “all-risks” policy or a “war-risks” policy. Different reinsurers cover these categories. But generally, hull claims are paid once the insured value is established, even if liability takes more time.

Do you expect regulatory or contractual changes after the recent crash?

The DGCA has conducted audits, but as of now it appears there were no systemic lapses. Aviation is already a heavily regulated sector. There hasn’t been any knee-jerk reaction, though Air India voluntarily curtailed some operations to focus on maintenance and safety before resuming normal services from October 1, 2025. Globally, the fraternity such as manufacturers like Boeing and Airbus, regulators, airlines, and insurers quickly share lessons and implement changes. If the final accident report suggests corrective steps, the industry will adapt.

How are premiums trending after this accident?

We are already seeing upward movement. Indigo’s premium reportedly rose by around 10%. Across the board, increases are likely to be in the range of 10–20 percent, though the exact number depends on each airline’s claims history. General aviation such as helicopters and private jets is also seeing some premium hikes.

Are reinsurers likely to tighten terms for Indian carriers now?

Yes, terms are already hardening. Premiums are increasing, and there may be stricter conditions. But I don’t foresee a reduction in coverage, since the aviation insurance wordings are fairly standard globally.

How significant is Tata AIG’s aviation book?

The overall general insurance premium in India is around Rs 3 lakh crore. Aviation accounts for less than Rs 1,000 crore of that, so it’s a small share overall. But Tata AIG is the largest private aviation insurer, with a portfolio of about Rs 170–175 crore last year. We see it as a growth area, given the government’s plans for 80 new airports, expansion of MROs (maintenance, repair and overhaul), growing drone usage, and even space insurance. Last year, for instance, we provided third-party liability cover for a satellite already in orbit.

Who are your major clients, and which segments are growing fastest?

Currently, airlines contribute the majority, roughly 70 percent of the aviation premium pool. Airports, MROs, and general aviation contribute smaller shares. But with new airports and private participation, non-airline segments will grow faster over the next 5-10 years. We cover all aviation verticals such as airlines like Air India and Indigo, airports, private aircraft, aviation product liability, crew insurance, drones, and even space risks. We see opportunities across all of them.

What challenges do you face as an aviation insurer?

Frankly, India is an exciting market right now. Growth opportunities abound across airlines, airports, drones, and space. The only real constraint is dependence on global reinsurers for large risks, which is likely to persist for the next couple of years. If we’re being hopeful, with more reinsurers setting up in India, is may ease in the medium term.