A recent plane crash involving an Air India Boeing 787-8 Dreamliner has raised questions about the insurance coverage of the aircraft and its passengers. According to reports, Air India has secured a total insurance cover of $20 billion for its fleet, which includes over 300 aircraft. The annual premium for this insurance is around $30 million, despite the insured amount doubling from $10 billion to $20 billion compared to the previous year.
New India Assurance and Tata AIG are expected to be the main Indian insurers for the crashed plane. However, Indian insurance companies typically only keep a small portion of the risk, with most of it being passed on to global reinsurance firms. In this case, around 5% of the total insurance claim is likely to be passed on to India’s state-owned reinsurer GIC Re, while the rest will be handled by international reinsurers such as AIG London.
There are two types of insurance payouts expected in this case: hull insurance and passenger liability. Hull insurance refers to the compensation paid for the aircraft itself, which is expected to be between $200 million and $300 million. Passenger liability, on the other hand, refers to the insurance paid for loss of life, injuries, or baggage damage to passengers. This is expected to cross $500 million, depending on factors such as the passenger’s age, job, and the outcome of legal cases filed by their families.
The final payout will depend on detailed assessments, passenger profiles, and legal proceedings. Under the Montreal Convention and India’s Carriage by Air Act, airlines are legally required to pay compensation to families of passengers who die or suffer serious injuries. A similar case was seen in 2020 when an Air India Express Boeing 737 crashed during landing in Kozhikode, resulting in a total insurance payout of $38 million to passengers under liability coverage.
The insurance claim process is expected to be complex, involving multiple parties and regulations. The lead reinsurer, AIG London, will play a significant role in handling the claim, along with Indian insurance companies and reinsurers. The crash highlights the importance of insurance coverage in the aviation industry, where the risk of accidents and losses is high. As the investigation into the crash continues, the insurance payouts will be closely watched, and the final amounts will depend on various factors, including the cause of the crash and the severity of the damages.