Kathmandu. On June 12, an Air India AI-171 aircraft crashed within two minutes of take-off in Ahmedabad, India. A total of 241 passengers, including crew members, were killed and one was rescued alive.
At least 34 people were killed when the plane crashed into a residential building. So far, 275 people have died in this accident. Some of the injured are still undergoing treatment.
AirAsia’s plane crash has added to the pressure on the global aviation reinsurance market. According to Global Data, the incident related to the first fatal hull damage of the Boeing 787-8 Dreamliner is expected to have a major impact on aviation insurers and reinsurers in India and globally.
In 2023, India’s domestic aviation insurance direct written premium (DWP) stood at $127.8 million. Global Data analyst Swarup Kumar Sahu said, “Claims from this one incident could potentially exceed the entire annual premium. ’
Indian insurers usually transfer more than 95 per cent of the aviation premium to global reinsurers. Which means the financial burden will be largely on the international players.
New India Assurance and Tata AIG are the primary insurers involved. However, their risk is limited as flights account for only 1.1 per cent and 1 per cent of their total premiums, respectively.
Both companies have reinsured most of their aviation risks. State-owned reinsurance company GIC Riley will have to bear a risk of about 5 per cent due to the mandatory discount facility.
India’s aviation insurance sector has been at a loss due to repeated incidents such as damage to jet airways and SpiceJet-operated aircraft and previous accidents related to Su-30 fighter jets. The Air India crash is expected to put more pressure on the sector.
The total insurance cost from the accident is estimated to be more than $200 million. These include the cost of the aircraft, which is estimated to be between $75 million and $80 million million, and passenger liability costs under the Montreal Convention and domestic law.
GlobalData expects the event to reevaluate reinsurance structures and contribute to rate increases in the 2026 renewal cycle. The Indian government is also considering grounding the Boeing 787-8 aircraft. This can lead to claims of disruption in business. This could further damage the profitability of these vulnerable insurers.
Global data predicts global reinsurance companies will tighten underwriting conditions, raise premiums and reassess risks for wide-body aircraft.
