In Air India crash aftermath, insurance premiums set to soar

South China Morning Post

5 hours ago

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 increases 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
Rescuers work at the site the airport in Ahmedabad where Air India flight 171 crashed into residential area on June 12. Photo: AFP
Insurance claims for the Air India crash are expected to be in the realm of US$475 million, including those for the aircraft's hull and engine as well as additional liability for loss of life. 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 Allianz SE. 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.
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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 would be redistributed to airlines across the globe.