Update: Deadly Air India Crash Will Harden Aviation Reinsurance Market: GlobalData

The fatal crash of Air India flight AI171 on June 12, 2025 is expected to send ripple effects across the global aviation insurance market, significantly affecting insurers and reinsurers in India and globally, , the London-based data and analytics company.

The accident resulted in the death of 241 passengers and crew members and marks the first-ever fatal hull loss of a Boeing 787-8 Dreamliner, considered one of the most advanced and safest airliners of the company. (Editors note: One passenger survived the crash and at least 29 people have been killed on the ground).

“The crash is anticipated to cost the insurance industry more than $200 million, including the aircraft, which is valued between $75 million and $80 million, [as well as] the liability exposure under the Montreal Convention and domestic legislation,” commented Swarup Kumar Sahoo, senior insurance analyst at GlobalData, in a statement. “This will harden the 2026 reinsurance renewal as reinsurers are expected to reassess agreement structures.”

As per the Montreal Convention, “airlines are liable to pay up to 128,821 Special Drawing Rights (SDRs) per passenger for loss of life. One SDR is around $1.40,” Sahoo said in an emailed explanation. “Based on this calculation, the minimum liability cover for passengers will go upwards $40 million. Additionally, under the convention other liability includes loss of baggage, subject to a maximum of SDR1,288 per passenger. However, the actual payout will depend on the coverage purchased by Air India.”

On the other hand, Sahoo continued, claims related to third-party property damage and loss of life on the ground may go up to $60 million-$80 million. “In total, including claims on the value of aircraft (hull) of around $80 million, the total claims amount will be more than $200 million,” Sahoo said.

India’s domestic aviation insurance market’s direct written premium (DWP) stood at $127.8 million in 2023, said Sahoo in his commentary, noting that claims “from this single event could potentially exceed the entire domestic annual premium for the aviation market in India.”

“As domestic insurers have been ceding more than 95% of their aviation insurance DWP to global reinsurers, the financial burden will predominantly fall on international reinsurers, leading to the hardening of the aviation reinsurance and insurance market,” he added.

Although New India Assurance and Tata AIG are the major insurers covering the risk, the impact of this incident on the domestic market is limited as both the insurers generated only 1.1% and 1% of their total insurance premium from aviation and ceded most of it to global reinsurers, said GlobalData, citing statistics from its .

The Indian reinsurer GIC Re is exposed to around 5% of the risks associated with the incident due to the mandatory ceding requirement, GlobalData said.

“Reinsurers are expected to reassess risks associated with wide-body aircraft, recalibrate pricing models, and impose stricter terms,” said Sahoo. “This will reinforce market discipline, accelerate the withdrawal of marginal capacity, and reshape aviation reinsurance arrangement negotiations for the 2026 renewal cycle.”

Furthermore, the government is considering grounding the Boeing Dreamliner 787-8 fleet, which is expected to increase associated business interruption claims, which will directly affect the profitability of insurers underwriting such risks, the GlobalData report said.

Historically, Indian aviation insurance has been loss-making due to a rise in the number of air accidents, the GlobalData report added.

Prior air accidents, such as accidents damaging the aircraft parts of and SpiceJet (from bird strike, burst tire and a hard landing), as well as the crash of (in 2018) have made aviation insurance in India loss-making during 2016-2020, said the GlobalData report, noting that this incident will further deteriorate the loss-making Indian aviation insurance market.

(Editor’s note: An Air India Express Boeing 737 crashed during landing in Kozhikode in 2020 resulted in the death of 21 people, which had total passenger liability claims payout of an estimated $38 million, according to Sahoo, who quoted market sources).

Photograph: Officials inspect the site of Thursday’s Air India plane crash on the roof of a building in Ahmedabad, India, Friday, June 13, 2025. (AP Photo/Ajit Solanki)