India’s deadliest plane crash in over a decade is poised to send shockwaves through the aviation insurance sector, potentially resulting in one of the nation’s most expensive claims, estimated at approximately $475 million.
“This aviation insurance claim could be one of the biggest in India’s history,” stated Ramaswamy Narayanan, chairman and managing director of General Insurance Corporation of India, one of the insurers covering Air India.
According to Narayanan, the claim for the aircraft’s hull and engine is estimated at approximately $125 million. He further projects that liability claims related to loss of life for passengers and others will amount to around $350 million. This total exceeds three times the aviation industry’s annual premium in India for 2023, as reported by GlobalData.
The financial fallout from the crash, which claimed the lives of 241 people on board and others in a densely populated area of Ahmedabad, western India, on Thursday, is expected to reverberate across the global aviation insurance and reinsurance markets. Additionally, it is likely to drive up insurance costs for airlines operating in India.
An aircraft tire amongst the debris at the crash site of Air India flight AI171 in Ahmedabad on June 12, 2025. Photo credit: Siddharaj Solanki/Bloomberg
Industry insiders say aviation insurance premiums in India are expected to increase, either immediately or upon upcoming policy renewals.
The total insurance payout for Air India could rise further, as the accident involved foreign nationals whose claims will be assessed according to the regulations of their respective countries, according to sources who requested anonymity due to the sensitive nature of the information.
An Air India spokesperson did not respond immediately to requests for comment.
According to Narayanan, insurers will initially settle the hull claim before addressing liability claims. “It will take some time for liability claims to be settled,” he added.
The effect on the domestic market will be somewhat cushioned by the fact that both companies derive only about 1% of their total insurance premiums from aviation and have ceded the majority of that risk to global reinsurers, according to insurance data from GlobalData.
Overall, domestic insurers have ceded over 95% of their aviation insurance direct written premiums (DWP) to global reinsurers.
Due to this, “the financial burden will predominantly fall on international reinsurers, leading to the hardening of the aviation reinsurance and insurance market,” said Swarup Kumar Sahoor, senior insurance analyst at GlobalData in a release on Monday.
