NEW DELHI- Air India’s Boeing 787 Dreamliner crash in Ahmedabad has triggered what industry experts predict will become India’s costliest aviation insurance claim, with potential liabilities exceeding Rs 1,000 crore. The amount surpasses the total annual premium for India’s entire aviation sector!
The aircraft crashed near Ahmedabad airport (AMD), reportedly killing over 240 people and causing significant collateral damage on the ground. The incident involved registration VT-ABN, a Dreamliner delivered in 2013 and insured for approximately $115 million in 2021.
Photo: PM Narendra Modi X HandleAir India Insurance Structure
Air India (AI) maintains its fleet coverage through a $20-billion aviation programme that splits hull and liability coverage across multiple insurers. Tata AIG, a group company, underwrites part of the risk alongside other domestic insurers. This includes New India Assurance and GIC Re.
The reinsurance structure operates under a global consortium led by AIG with participation from public sector entities. Following the incident, shares of New India Assurance and GIC Re fell 4% and 3% respectively.
Amit Agarwal, CEO and MD at Howden India, confirmed that aircraft damage falls under aviation hull all-risk coverage, which insures the current aircraft valuation, including spares and equipment. Hitesh Girotra of Prudent Insurance Brokers estimates the hull value at approximately $75-80 million.
Photo: PM Narendra Modi X HandleLiability Claims Expected
Industry experts anticipate that liability claims will significantly outweigh hull damage costs. Under the Montreal Convention of 1999, passenger compensation is calculated at 1,28,821 Special Drawing Rights per passenger, equivalent to roughly $1,71,000 per individual.
Girotra outlined multiple liability components, including passenger nationality considerations that determine minimum Montreal Convention obligations. The crash site’s location adds third-party property damage liability and potential civilian casualty compensation to the total claim structure.
Photo- HowdenGlobal Aviation Insurance Context
Narendra Bharindwal, president of the Insurance Brokers Association of India, explained that large commercial aircraft insurance coverage operates on substantial global scales.
Hull values for Boeing 787 aircraft typically range between $200-300 million, while liability coverage for international routes often exceeds $500 million.
Air India’s aviation programme, consistent with similar-sized operations, distributes risk across global reinsurance markets to prevent single insurer exposure.
The complex claim structure reflects modern aviation insurance’s evolving nature and the significant financial protection required for international airline operations.
Photo: BoeingImplications and Industry Impact
The Air India (AI) Dreamliner crash represents a watershed moment for India’s aviation insurance sector, demonstrating the catastrophic financial exposure airlines face in modern operations.
The claim’s magnitude, potentially exceeding the country’s entire annual aviation insurance premium pool, underscores the critical importance of comprehensive global reinsurance partnerships for risk distribution.
This incident will likely drive premium increases across India’s aviation sector as insurers reassess risk calculations and coverage structures. The crash also highlights the interconnected nature of global aviation insurance markets, where a single incident can impact multiple insurers across continents.
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