Air India Crash to Impact Insurance Premiums
The recent Air India crash is expected to lead to a significant increase in insurance premiums for airlines, with Indian insurance policy sellers anticipating a jump of up to 30%. Sajja Praveen Chowdary, director at Indian broker Policybazaar, predicts that premiums for hull, war-risk, and liability coverage will rise by 10% to 30% in the next renewal cycle. This potential increase is higher than previous crashes, given the severity of the Air India accident, which resulted in 241 deaths on board and dozens on the ground when it crashed into a residential area in Ahmedabad on June 12.
Insurance claims for the crash are expected to be around $475 million, covering the aircraft’s hull and engine, as well as additional liability for loss of life. Air India’s fleet is insured for approximately $20 billion, with an annual premium of nearly $30 million. According to a report by Allianz SE, crashes accounted for the majority of the $15 billion in aviation claims during the five-year period ending 2024. The global aviation insurance market is likely to be affected, with premium increases redistributed across airlines worldwide.
The impact of the crash on insurance premiums will be significant, and further losses could drive premiums to record levels. Globally, the growth in air travel, driven by regions such as Asia-Pacific and North America, was expected to drive premiums to over $8 billion. The Air India crash will likely contribute to the hardening of global rates, affecting airlines worldwide.
