The full extent of compensation and damages is still being assessed. (image-X/CISFHQrs)
The tragic crash of an Air India Boeing 787-8 Dreamliner in Ahmedabad on Thursday, which killed 241 of the 242 people on board, may result in the largest aviation insurance payout in Indian history. Industry estimates place Air India’s total liability between $211 million and $280 million, or up to Rs 2,400 crore, factoring in aircraft loss, passenger compensation, and third-party damages, according to multiple reports.
The aircraft, operating as AI171 from Ahmedabad to London Gatwick, crashed 32 seconds after take-off at 1:38 pm, failing to gain lift. It carried 169 Indian nationals, 53 British nationals, 7 Portuguese citizens, and one Canadian. The sole survivor is Vishwash Kumar Ramesh, a British Indian passenger.
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The physical loss of the Boeing Dreamliner alone is estimated at $80 million to $250 million, depending on the aircraft’s valuation, age, and configuration, reported Mint. The plane, a 2013 model (registration VT-ABN), was reportedly insured for $115 million in 2021.
Since the aircraft crashed into a residential area near Meghani Nagar, the airline could face significant third-party property damage and casualty liabilities, further escalating costs.
In addition to interim compensation of Rs 1 crore per deceased passenger announced by the Tata Group, final payouts will follow the Montreal Convention of 1999, which India joined in 2009. This international treaty sets the compensation at up to 128,821 Special Drawing Rights (SDRs) per passenger—currently around $171,000, or approximately Rs 1.47 crore.
Who Bears the Insurance Burden?
Air India, like other major global carriers, does not depend on a single Indian insurer. Its fleet insurance is distributed across global markets, including London and New York, through a network of reinsurers. Typically, the lead reinsurer covers 10-15% of the risk, while others hold smaller shares ranging from 1.5% to 2%.
“No single insurer bears the entire risk—coverage is widely distributed among global reinsurers, with shares as small as 1.5% to 2% and a lead reinsurer typically taking 10-15%,” said Narendra Bharindwal, president of the Insurance Brokers Association of India.
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Since its privatisation under the Tata Group, Air India’s insurance procurement has moved away from government tenders. Tata now selects insurers and reinsurers based on risk and cost analysis through private contracts.
While initial estimates suggest a staggering liability, the full extent of compensation and damages is still being assessed. With investigations ongoing and rescue operations still underway, final figures are expected only after detailed reports from aviation regulators and insurers.
