On June 12, 2025, Air India Flight AI-171, a Boeing 787 Dreamliner, crashed in Ahmedabad, Gujarat, killing two hundred forty-one of two hundred forty-two passengers and crew, plus over fifty on the ground, marking India’s deadliest single-aircraft disaster.

Vishwas Kumar Ramesh, seated in seat 11-A, was the sole survivor. The crash, likely caused by engine failure or a bird strike, is poised to generate India’s largest aviation insurance claim, estimated at one hundred thirty to one hundred fifty million dollars. This tragedy, reported by India Today, raises critical questions about how airline insurance functions and why premiums may surge globally.

The Mechanics of Airline Insurance

Airline insurance is a multi-layered system designed to mitigate financial risks from aviation accidents. It includes: 

• Hull Insurance: Covers physical damage to the aircraft, valued at seventy-five to eighty million dollars for the Boeing 787. Total loss, as in this case, results in a full payout with no salvageable parts, per Business Today. 
• Passenger Liability: Compensates for deaths or injuries under the Montreal Convention, mandating up to one hundred seventy-one thousand dollars per passenger. High-profile victims or lawsuits could inflate costs significantly. 
• Third-Party Liability: Addresses ground damage, such as the hostel struck in Ahmedabad, with claims potentially reaching thirty to fifty million dollars, according to The Indian Express. 
• Hull War Risk: Protects against terrorism or sabotage, relevant if investigations uncover such causes.

Policies are syndicated among global reinsurers, with Indian insurers like New India Assurance covering roughly ten percent, while international firms handle the rest. Liability claims, due to legal complexities, may take two to three years to settle, as noted in The New Indian Express.

Why Premiums Are Set to Increase

The Ahmedabad crash’s one hundred fifty-million-dollar claim will strain global reinsurers, who absorb most of the loss. Combined with recent incidents like the Jeju Air crash, costing two hundred to four hundred million dollars, global aviation losses are approaching annual premium collections, per Business Today.

Underwriters are likely to tighten criteria, focusing on aircraft maintenance and safety protocols. India may be deemed “high-risk” for wide-body operations, driving premiums up ten to fifty percent globally, with non-claim airlines facing ten to twenty percent hikes. This hardening market, as The Indian Express reports, reflects the industry’s response to escalating risks.

Balancing Safety and Cost

The crash underscores insurance’s vital role, with Tata Group pledging one crore rupees per victim’s family. However, rising premiums could increase ticket prices, impacting passengers. As investigations continue, this tragedy will reshape risk assessments, ensuring safety remains paramount while challenging affordability in aviation.

-By Manoj H