News Brief
India’s Worst Air Crash In Over A Decade Triggers $475 Million Insurance Shock; Global Reinsurers To Bear The Brunt
An Air India flight. (Representative Image Via Wikimedia Commons).
One of India’s deadliest aviation tragedy has sent ripples through the global insurance sector, with total claims from the Air India crash in Ahmedabad now estimated at a staggering $475 million (Rs 39.4 billion), making it one of the country’s most expensive aviation losses on record, according to a Bloomberg report.
According to Ramaswamy Narayanan, Chairman and Managing Director of the General Insurance Corporation of India, “This aviation insurance claim could be one of the biggest in India’s history.” GIC is among the insurers that had underwritten Air India’s aviation policies.
The catastrophic crash, which killed 241 passengers and several others on the ground after the aircraft went down in a densely populated area of Ahmedabad on 12 June, is now expected to drive up insurance costs across the Indian airline industry.
While premiums may not spike immediately, a significant rise is anticipated during the next renewal cycle.
Narayanan told Bloomberg the hull and engine claims alone amount to around $125 million (Rs 10.44 billion), while liability claims related to passenger deaths and other damages are projected to reach $350 million (Rs 29.23 billion).
While the domestic aviation insurance market may feel some heat, the lion’s share of the losses will fall on international reinsurers.
Indian insurers typically retain only around 5 per cent of their aviation portfolios, with more than 95 per cent of the direct written premium ceded to global reinsurers.
Swarup Kumar Sahoor, senior analyst at GlobalData, told Bloomberg the crash would likely harden the international reinsurance and insurance market, signalling higher premiums and tighter terms worldwide in the wake of this disaster.
