Air India crash risks fuelling up to 30% jump in airline insurance premiums
Premium hikes of that scale would be larger than previous crashes, given the enormity of the Air India accident, the brokers said. PHOTO: REUTERS
MUMBAI – Indian insurance policy sellers expect the cost of coverage for airlines to spike as much as 30 per cent after the deadliest aviation crash in more than a decade.
Sajja Praveen Chowdary, director at Indian broker Policybazaar, expects premiums for hull, war-risk, and liability coverage to increase by 10 per cent to 30 per cent in the next renewal cycle. Rohit Boda, group managing director at broker J.B.Boda Group, predicts a rise of 10 per cent to 25 per cent.
Premium hikes of that scale would be larger than previous crashes, given the enormity of the Air India accident, the brokers said. The crash killed 241 on board and dozens on the ground when it smashed into a residential area in the city of Ahmedabad on June 12.
Insurance claims for the Air India crash are expected in the realm of US$475 million (S$612 million), including those for the aircraft's hull and engine as well as additional liability for loss of life, Bloomberg News reported earlier. Air India's fleet is insured for about US$20 billion in total, with an annual premium near US$30 million, according to data from Policybazaar.
'A catastrophe of this scale will contribute to hardening of global rates,' said Chowdary, director at Policybazaar for Business.
Globally, crashes accounted for the majority of the US$15 billion in aviation claims during the five year period ended 2024, according to a report by insurance giant Allianz. Growth in air travel, fuelled by Asia-Pacific and North America, was expected to drive premiums to more than US$8 billion, according to the report.
The insurance premium increase would be for all airlines, said people familiar with the matter, who asked not to be identified discussing private matters. They added that the impact will be redistributed to airlines across the globe.
The premium increase is expected to be large, and further loss of aircraft could drive premiums to a record, the people said. bloomberg
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