AI 171 crash may be India's costliest aviation insurance claim
What's the story
The tragic crash of an Air India Boeing 787-8 Dreamliner in Ahmedabad on Thursday could turn out to be the highest-ever aviation insurance claim in India. The liabilities are estimated to be between $211 million and $280 million (up to ₹2,400 crore). The Air India flight 171 was headed for London Gatwick with 242 people onboard, out of which 241 died. One passenger miraculously survived.
Insurance details
What is flight accident insurance and what does it cover?
Flight accident insurance is offered on all flights and can cost between ₹10 and ₹500, depending on the distance and coverage. It compensates passengers or their nominees in case of death or injury due to an aircraft-related incident. The insurance also covers emergency medical expenses, surgeries, treatments, post-treatment care, and disabilities caused by a flight-related incident.
Claim details
Airlines have fleet insurance policies covering various risks
Ramaswamy Narayanan, CMD of the General Insurance Corporation of India (GIC), told NDTV that airlines have fleet insurance policies covering risks like aircraft hulls, spare parts, and liabilities to passengers and third parties. In this case, claims are expected under both hull and liability sections. The total amount will depend on factors like the age of the deceased, among other factors. Amit Agarwal, the CEO and MD at Howden India, said the valuation can range between $211 and $280 million.
Expert insights
Aircraft was insured for about $115 million in 2021
The aircraft (VT-ABN) involved (VT-ABN) in the crash was insured for about $115 million in 2021. "Whether the damage is partial or total, the loss would be covered based on the value declared by the airline," he added. Passengers will be compensated under the 1999 Montreal Convention. The amount is calculated in Special Drawing Rights (SDRs), currently valued at 1,28,821 SDRs or around $1,71,000 (₹1.47 crore).
Industry perspective
Air India's aviation program is reinsured across global markets
Narendra Bharindwal, president of the Insurance Brokers Association of India, said, "Insurance coverage for large commercial aircraft such as the Boeing 787 is substantial and structured globally." "Hull values can range between $200-300 million and liability cover for international routes often exceeds $500 million." Air India's aviation program is reinsured across global markets. No single insurer bears the entire risk.