Air India crash seen triggering $608 million in insurance claims
India's deadliest plane crash in more than decade is set to trigger one of the country's costliest industry claims. PHOTO: EPA-EFE
MUMBAI – India's deadliest plane crash in more than decade is set to send shock waves through the aviation insurance industry and trigger one of the country's costliest claims, estimated at around US$475 million (S$608 million).
'This aviation insurance claim could be one of the biggest in India's history,' said Ramaswamy Narayanan, chairman and managing director at General Insurance Corporation of India, one of the firms that has provided coverage for Air India.
The claim for the aircraft hull and engine is estimated at around US$125 million, according to Mr Narayanan. He estimates additional liability claims for loss of life for passengers and others will be around US$350 million. The sum is more than triple the annual premium for the aviation industry in India in 2023, according to GlobalData.
The financial repercussions of the crash that killed 241 people on board and others as it fell in a densely populated part of Ahmedabad in western India on June 12 will ripple through the global aviation insurance and reinsurance market. It's also likely to make insurance costlier for airlines in India.
Insurance premiums across the aviation industry are expected to rise in India, either now or at the time of policy renewals, according to people familiar with the matter.
On the Air India insurance payout, totals could climb, since there were foreign nationals killed in the accident, and those claims will be calculated according to the rules in their respective jurisdictions, the people said, who asked not to be identified discussing private matters.
A spokesperson for Air India did not immediately reply to request for comment.
Insurers will first settle the hull claim followed by liability claims, according to Mr Narayanan. 'It will take some time for liability claims to be settled,' he said.
The impact on the domestic market will be partly mitigated by the fact that both companies only generated about 1 per cent of their total insurance premium from aviation, and ceded most of it to global reinsurers, according to GlobalData's insurance data.
Broadly, domestic insurers have offloaded more than 95 per cent of their aviation insurance direct written premium, or DWP, to global reinsurers.
Due to this, 'the financial burden will predominantly fall on international reinsurers, leading to the hardening of the aviation reinsurance and insurance market,' said Swarup Kumar Sahoor, senior insurance analyst at GlobalData in a release on June 16. BLOOMBERG
Join ST's Telegram channel and get the latest breaking news delivered to you.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Times
28 minutes ago
- Business Times
New World bondholders receive interest payment on dollar note
[HONG KONG] New World Development has paid interest due Monday (Jun 16) on a dollar note, according to several bondholders, giving the indebted Hong Kong builder some breathing room as it works to complete an HK$87.5 billion (S$14.3 billion) loan refinancing deal. The company faced US$5.1 million in interest payments due Monday on the 5.875 per cent bond, according to Bloomberg calculations. Investors were closely monitoring the deadline after the builder recently decided to defer coupon payments on four perpetual notes. The payment was crucial for New World, as an event of default could be triggered if it failed to honour the coupon within 14 days of the due date, according to an offering document seen by Bloomberg News. It can sometimes take two to three days for dollar bondholders to receive interest payments once they are initiated. New World did not immediately respond to a request for comment. New World, which is grappling with HK$210.9 billion of liabilities, is one of the most indebted of Hong Kong's major developers. Any signal of a possible default by the builder, controlled by the family of Hong Kong tycoon Henry Cheng, could intensify concerns about sluggish real estate market conditions and possible spillover effects. The builder has prioritised talks with banks for months to secure the loan refinancing deal to ease its liquidity stress. Separately, it is also using one of its most valuable assets in Hong Kong – a harbour complex that houses luxury mall K11 Musea – to seek a new loan of as much as HK$15.6 billion. BLOOMBERG
Straits Times
44 minutes ago
- Straits Times
China's Xi in Kazakhstan to cement Central Asia ties
Kazakh President Kassym-Jomart Tokayev (right) and Chinese President Xi Jinping meeting in Astana, Kazakhstan, on June 16. PHOTO: EPA-EFE ASTANA - Chinese President Xi Jinping will meet Central Asian leaders at a summit in Kazakhstan on June 17 , his second trip to the region in under a year as Beijing competes with Russia for influence there. The summit in the Kazakh capital brings together Mr Xi – who arrived in Astana on June 16 – and the leaders of Kazakhstan, Kyrgyzstan, Uzbekistan, Tajikistan and Turkmenistan. Under Russia's orbit until the fall of the Soviet Union in 1991, the five countries of Central Asia have courted interest from major powers including China and the United States since becoming independent. The region is rich in natural resources and strategically located at the crossroads of Europe and Asia. While Central Asian leaders continue to view Russia as a strategic partner, ties with Moscow have loosened since the war in Ukraine. The five nations are taking advantage of the growing interest in their region and coordinating their foreign policies. They regularly hold summits with China and Russia to present the region as a unified bloc and attract investment. The '5+1' format high-level talks have also been organised with the European Union, the United States, Turkey and other Western countries. 'The countries of the region are balancing between different centres of power, wanting to protect themselves from excessive dependence on one partner,' Kyrgyz political scientist Nargiza Muratalieva told AFP. Biggest trade partner Russia says China's growing influence in the region does not pose a threat. 'There is no reason for such fears. China is our privileged strategic partner, and the countries of Central Asia, naturally, are our natural historical partners,' Kremlin spokesman Dmitry Peskov told reporters on June 16 . But China has now established itself as Central Asia's leading trading partner. Trade volume with the region was estimated at $95 billion (S$122 billion) in 2024, according to Chinese customs. That figure is far ahead of the European Union (around US$64 billion according to the EU Council in 2023) and Russia, with US$44 billion. Central Asia is also an important target for China in its Belt and Road initiative – which uses huge infrastructure investments as a political and diplomatic lever. Mr Xi's visit to Kazakhstan will '(open) up more room for the joint construction of the Belt and Road', Chinese foreign ministry spokesman Guo Jiakun said on June 16 . Construction of the Uzbekistan-Kyrgyzstan-China railway and the China-Tajikistan highway, which runs through the Pamir Mountains to Afghanistan, are among the planned investments. New border crossings and 'dry ports' have already been built to process trade, such as Khorgos in Kazakhstan, one of the largest logistics hubs in the world. 'Neither Russia nor Western institutions are capable of allocating financial resources for infrastructure so quickly and on such a large scale, sometimes bypassing transparent procedures,' said Dr Muratalieva. Developing transport corridors in Central Asia allows China to reduce delivery times by sending goods to Europe via the Caspian Sea, bypassing Russia. Chinese companies are also increasingly present in Central Asia's energy sector, seeking contracts for gas in Turkmenistan, uranium in Kazakhstan and rare earths in Tajikistan, among others. Kazakhstan said last week that Russia would lead the construction of its first nuclear power plant but that it wanted China to build the second. 'Central Asia is rich in natural resources such as oil, gas, uranium, gold and other minerals that the rapidly developing Chinese economy needs,' Dr Muratalieva said. 'Ensuring uninterrupted supplies of these resources, bypassing unstable sea routes, is an important goal of Beijing,' the analyst added. Human rights China also positions itself as a supporter of the predominantly authoritarian Central Asian leaderships. At the last Central Asia-China summit, Mr Xi called for 'resisting external interference' that might provoke 'colour revolutions' that could overthrow the current leaders in the region. 'Central Asia directly borders Xinjiang ... Beijing sees the stability of the Central Asian states as a guarantee of the security of its western borders,' Dr Muratalieva added. Beijing is accused of having detained more than a million Uyghurs and other Muslims as part of a campaign which the UN has said could constitute 'crimes against humanity'. Central Asia remains sparsely populated and has just 80 million inhabitants despite being as geographically large as the European Union. This is far less than the 1.4 billion Chinese population, now exempt from visa requirements in some countries of the region. Some in Central Asia are concerned by this arrangement and fear a loss of sovereignty. AFP Join ST's Telegram channel and get the latest breaking news delivered to you.
AsiaOne
an hour ago
- AsiaOne
US State Department approves possible sale to Australia of fighter jet spare parts, World News
WASHINGTON — The US State Department approved a possible foreign military sale to Australia of fighter jet spare parts for US$2 billion (S$2.56 billion), the Pentagon said in a statement, adding the principle contractor will be Boeing. Australia had requested to buy the equipment related to the sustainment of its Boeing F/A-18F Super Hornet fighter jet, and the EA-18G Growler jet which is mainly used in electronic warfare roles such as radar jamming. [[nid:719165]]
