The crash of an Air India Boeing 787-8 Dreamliner on June 12 could become the most expensive aviation insurance claim in India’s history, The Times of India reports. Potential claims are estimated to exceed ₹1,000 crore. This amount surpasses the total annual premium generated by the Indian aviation insurance sector.
Overview of Insurance Coverage
Air India insures its fleet through a $20 billion global aviation program. The policy splits coverage between hull and liability components. Tata AIG, a group company under the airline’s parent conglomerate, underwrites part of the risk alongside other domestic insurers. Meanwhile, a global consortium led by AIG manages reinsurance, with support from public sector firms like New India Assurance and GIC Re. Following the crash, New India Assurance and GIC Re saw their shares fall by 4% and 3%, respectively.
Hull Loss Estimates
The aircraft, identified as VT-ABN and delivered in 2013, carried an insurance value of approximately $115 million as of 2021. Although the aircraft’s age may help reduce the hull loss, experts still expect a significant payout. Industry estimates place the current hull value between $75 million and $80 million. The aviation hull all-risk section covers the aircraft’s declared value, including spares and equipment, regardless of whether the damage is partial or total.
Liability Claims and Scope
Liability claims will likely form the largest part of the financial loss. These include compensation for over 240 reported passenger deaths and potential third-party claims related to ground damage near the airport. Under the Montreal Convention of 1999, compensation per passenger stands at 128,821 Special Drawing Rights (SDRs), or roughly $171,000.
In addition, passenger nationality will influence the minimum compensation requirements under the convention. Moreover, additional liability may arise from third-party property damage and any civilian fatalities where the aircraft crashed.
Global Insurance Structure
The size and complexity of this claim underscore the global structure of aviation insurance. Large commercial aircraft such as the Boeing 787 typically carry hull values between $200 million and $300 million, while liability coverage for international flights often exceeds $500 million. To manage this level of exposure, insurers spread the risk across multiple international reinsurers rather than relying on a single company.
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