Airline insurance premiums likely to rise up to 30% after Air India crash: Report

Insurance premiums for airlines may rise as much as 30% globally following the fatal Air India crash earlier this month, reported Bloomberg News, citing Indian insurance brokers.

The June 12 crash of an Air India Boeing 787 in Ahmedabad, which killed 241 passengers and crew and dozens more on the ground, is expected to result in claims nearing $475 million, according to the report.

Sajja Praveen Chowdary, director at insurance broker Policybazaar, expects premiums for hull, war-risk, and liability coverage to increase by 10% to 30% in the next renewal cycle, the report said.

Rohit Boda, group managing director at J.B. Boda Group, forecast a rise of 10% to 25%.

The expected hike is steeper than those following previous aviation accidents due to the scale of the incident.

Air India had recently secured a $20 billion insurance cover for its fleet, led by Tata AIG and supported by public-sector insurers and ICICI Lombard. The entire risk has been syndicated to international reinsurers, primarily based in London.

Industry officials said Air India’s aircraft involved in the crash was insured for an amount exceeding $120 million.

The carrier pays about $30 million annually for coverage across its fleet.

Insurance brokers said the expected increase in premiums would extend beyond India, affecting carriers worldwide, according to the report. Additional losses or accidents could drive insurance costs to record levels, they added.

Aviation insurance typically includes coverage for aircraft damage (hull), war-related incidents, and liability for passengers and third parties. Following the crash, the liability cover for passenger compensation and third-party claims will be triggered under the Montreal Convention, which mandates airlines pay fixed damages without requiring proof of negligence.

Insurance surveyors have begun assessing the crash site and gathering data to help underwriters understand the cause of the incident. Compensation for victims will follow international protocols, with each airline liable for up to 113,100 Special Drawing Rights (SDRs), equivalent to approximately ₹1.26 crore per victim.