Insurers, Overseas Reinsurers to Pay Around $ 120 mn Claim for Air India Plane Crash

Mumbai: Indian Insurance companies led by Tata AIG General Insurance and London reinsurers will have to pay a hefty approximately $ 80 million for the loss of the aircraft, in addition to $40-50 million under Passenger Legal Liability Claim and third-party liability claims arising from the crash of Air India Boeing 787 Dreamliner.

In a tragic incident, the Air India London-bound plane AI 171 crashed soon after take-off in Ahmedabad on Thursday afternoon, killing all the 242 on board, including passengers and cabin crew. Of the 242 individuals, 169 were Indian nationals, 53 British, 7 Portuguese, and 1 Canadian. The aircraft had also struck the hostel of BJ Medical College, killing at least five students and injuring 20 others.

“Tata AIG is the lead insurer and, along with public sector general insurers namely New India Assurance, Oriental Insurance, United India, and National Insurance, together hold 10 per cent share of the risk while the balance is reinsured in the London market. Claims will be paid by the UK reinsurers. The hull Agreed Value of the aircraft is $ 80 million covered under the Hull All Risk part of insurance.

Secondly, claims of around $40-50 million will have to be paid under the Passenger Legal Liability for the 242 expired passengers, third party liability for the building, property damage, and medical students who expired on the ground,” said a senior industry official.

“The Liability on the operator Air India will have multiple angles---The nationality of the passengers on board will define the minimum liability that is applicable to Air India as per Montreal Convention applicable. Secondly, since the aircraft crashed into a residential apartment there is a third-party property damage liability on the operator. There might also be loss of lives in that residential apartment where the aircraft crashed,” said Hitesh Girotra, vice-president, aviation and specialty lines at Prudent Insurance Brokers.

“For decades, public sector non-life insurer New India Assurance was providing insurance cover to Air India but after the takeover of the airline’s operations by Tata Group in 2022, the policy is being issued by Tata-AIG General Insurance. Air India paid around $ 20 million premium to insure its entire fleet while renewing its policy on April 1, 2025. We expect a hardening of aviation insurance premium rates going forward,” said the industry official.

“In international flights like this one, airlines are legally responsible for compensating victims and their families. India is a signatory to the Montreal Convention, 1999, which governs compensation for injury or death during air travel. As per the convention,

passengers are entitled to a compensation of up to 128,821 Special Drawing Rights (SDRs) around Rs 1.4 crore per person, irrespective of who was at fault and could be even higher if negligence or fault on the part of the airline is proven,” said Sourav Biswas, business head, (aviation insurance) at Alliance Insurance Brokers.