Air India’s Ahmedabad-London flight crash may see claim at USD 430 M

Mumbai, June 15

The claim coming out of the recent air crash in Ahmedabad is estimated to be around $430 million. It will include cost of hull and engine of the aircraft and liability losses including loss of lives of passengers and the lives lost on land. Insurers will first settle the hull claim followed by liability claims. It will take some time for liability claims to be settled.

In a tragic incident, Air India’s Ahmedabad-London (Gatwick) flight with 242 passengers crashed moments after takeoff from the city’s airport on June 12 afternoon killing all 242 passengers onboard except one.

The plane crashed on top of the dining area of state-run B.J. Medical College hostel, killing many medical students as well.

The re/insurers, which have provided the cover to Air India, have already swung into action to assess the loss situation and amount of claims that need to be paid.

Air India had renewed its mega $20 billion insurance policy with multinational AIG as the lead reinsurer since Apr 1. The primary insurers for the Air India policy are- Tata Aig General Insurance (lead insurer with 45 per cent share), ICICI Lombard General Insurance(7 per cent), New India Assurance(32 per cent), Oriental Insurance Company (14 per cent) and other PSU general insurers.

The airline had paid a premium of $30 million, same as last year, for insuring over 300 aircraft.

Almost 95 per cent of the Air India policy has been reinsured with a clutch of reinsurers led by AIG, Axa and Allianz. GIC Re also has a share in the policy including 4 per cent obligatory.

The reinsurers will have to pay for 95 per cent of the claims, which will be accrued out of damaged aircraft, dead and injured passengers and third party liabilities.

As per the Montreal Convention treaty, the Air India will have to pay a compensation of around Rs 1.30 crore each to the kin of victims of the plane crash.

Boeing said it was aware of initial reports and was working to gather more information. Boeing shares fell 6.8 per cent to $199.13 in pre-market trade.

“The building on which it has crashed is a doctors’ hostel… we have cleared almost 70 per cent to 80 per cent of the area and will clear the rest soon,” a senior police officer told reporters.

New India Assurance, which was the leader in the Air India insurance policy in 2020, had paid Rs 378.83 crore as a hull claim to the airline, the highest ever pay-out in the Indian aviation insurance market arising out of the crash.

" ICICI Lombard is committed to supporting those impacted by this unfortunate event,” a company spokesperson said.

We are working closely to ensure a thorough and timely assessment of claims, while offering our full support and remain committed to those affected. In this time of grief, please know you are not alone. Our helpline 1800 2666 and email id [email protected] is here to offer support, care and guidance every step of the way, he added.

EoM.

Industry sources revealed Bizz Buzz that the devastating crash has led to one of the largest-ever aviation insurance events in India. The Boeing 787-8 aircraft, declared a total loss, is estimated to be insured for ₹650–700 crore, based on age-adjusted insured value. Under the Montreal Convention, families of deceased passengers are entitled to ~₹1 crore each. With 240+ fatalities, this could result in payouts exceeding ₹240 crore.

Combined hull and liability exposures may cross ₹1,000–1,500 crore, depending on final settlements and legal claims.

Indian insurers retain only around 5% of the exposure, amounting to ₹50–75 crore, while the bulk will be absorbed by foreign reinsurers.

Air India’s fleet-wide aviation cover reportedly runs into ₹8,000–10,000 crore, with an annual premium estimated around ₹250 crore.

This incident is likely to harden the global aviation insurance market, especially for wide-body aircraft operators in Asia.

RPF Disaster Management Team headed by ASC/ADI+6 staff alongwith Hospital Team (6 doctors+ 20 staff+ 7 Ambulance )is rendering all possible help in rescue operation of Tragic Air India Flight Crash at Ahmedabad.

Team Ahmedabad is helping all sister agencies in rescue work is is geared up if further assistance is required.

EoM.