The crash of Air India flight AI171 on June 12, which resulted in 241 fatalities, is likely to have far-reaching effects on the global aviation reinsurance market, according to analysis from GlobalData.
The incident involved the first-ever fatal hull loss of a Boeing 787-8 Dreamliner, a model widely used across international carriers. The scale and nature of the loss have prompted immediate scrutiny from insurers and reinsurers globally.
Swarup Kumar Sahoo, senior insurance analyst at GlobalData, noted that the direct written premium (DWP) for India’s aviation insurance market was US$127.8 million in 2023. Claims stemming from this single event are expected to surpass that total.
As domestic insurers have been ceding more than 95% of their aviation insurance DWP to global reinsurers, the financial burden will predominantly fall on international reinsurers, leading to the hardening of the aviation reinsurance and insurance market,” Sahoo said.
New India Assurance and Tata AIG are the lead insurers covering the risk. According to GlobalData’s database, aviation accounted for just 1.1% and 1% of their respective total premiums, with most of the risk passed to international reinsurers.
The General Insurance Corporation of India (GIC Re) holds an estimated 5% exposure to the incident due to mandatory domestic cession requirements.
Indian aviation insurance has reported losses over multiple years, driven in part by several high-profile air accidents. Events such as partial aircraft damage involving Jet Airways and SpiceJet, along with the crash of a Su-30 fighter jet, contributed to underwriting losses between 2016 and 2020. The Air India crash is expected to deepen the strain on the sector.
Sahoo estimated that the total insurance-related loss from the incident could exceed US$200 million, including the aircraft hull – valued between US$75 million and US$80 million – and liability under the Montreal Convention and local laws.
“This will harden the 2026 reinsurance renewal as reinsurers are expected to reassess agreement structures,” he said.
The aircraft was covered under a US$20 billion aviation insurance program. Tata AIG, the lead insurer, shared the risk with other domestic and international insurers.
According to market sources, Tata AIG retained roughly 48% of the exposure, followed by New India Assurance at 34% and ICICI Lombard at 10%. The remaining shares were distributed among other carriers, with GIC Re participating through its share of the retained portion.
Meanwhile, the Insurance Regulatory and Development Authority of India (IRDAI) has directed insurers to fast-track claims associated with the crash. Companies have been asked to process claims without requiring First Information Reports or post-mortem documentation, using airline passenger manifests to verify beneficiaries.
A coordination cell under the Life and General Insurance Councils was also established to monitor weekly progress on settlements.
The reinsurance coverage for the aircraft is structured across global markets, with participation from multiple international players. The cession structure includes both proportional and excess-of-loss arrangements, making the Air India incident a potential stress test for current market capacity and pricing assumptions.
As the claims process unfolds, reinsurers are expected to revisit retention levels, treaty structures, and pricing models, with implications for upcoming renewal cycles.
The Indian government is reportedly considering the temporary grounding of the Boeing 787-8 fleet. If implemented, this could lead to further business interruption claims, affecting the underwriting performance of insurers involved with these risks.
Sahoo also said that reinsurers are likely to re-evaluate their exposure to wide-body aircraft, adjust pricing, and revise coverage terms.
“This will reinforce market discipline, accelerate the withdrawal of marginal capacity, and reshape aviation reinsurance arrangement negotiations for the 2026 renewal cycle,” he said.
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