The recent Air India Flight AI171 crash in Ahmedabad on June 12, 2025, is poised to become one of the biggest insurance deals/payouts in Indian aviation history.

Estimates suggest the total insurance claims could reach around $475 million (approximately ₹39.4 billion or ₹4,000 crore). This staggering amount includes:

• Aircraft Hull and Engine Damage: Approximately $125 million (around ₹10.44 billion) for the loss of the Boeing 787 Dreamliner.
• Liability Claims: Around $350 million (approximately ₹28.74 billion or ₹2,923 crore) for loss of life (241 confirmed deaths on board, plus additional ground fatalities), injuries, and third-party property damage (the plane crashed into a medical college hostel).

Key aspects of this significant insurance event:

• Global Reinsurers Bear the Brunt: While Indian insurers like Tata AIG, GIC Re, United India, Oriental Insurance, National Insurance, and ICICI Lombard are involved, the vast majority (over 90-95%) of the financial burden will be absorbed by international reinsurers, primarily based in the London and Bermuda markets.
• Impact on Aviation Insurance Market: This crash, being the first fatal one involving a Boeing 787 Dreamliner and one of the deadliest aviation accidents globally in a decade, is expected to “harden” the aviation insurance and reinsurance market. This means higher premiums and stricter terms for airlines worldwide, especially for wide-body aircraft operators in Asia.
• Montreal Convention: Compensation for victims’ families is largely governed by the Montreal Convention of 1999, to which India is a signatory. This mandates minimum compensation levels, with current estimates around 151,880 Special Drawing Rights (SDRs) per deceased passenger (roughly ₹1.78 crore to ₹1.85 crore), without the need to prove fault. Air India has also announced ex-gratia and interim payments.
• Complex Claims Process: The claims process will unfold in phases, with aircraft damage claims settled first, followed by more complex liability claims that will involve legal processes, especially for foreign nationals whose compensation will be governed by their respective jurisdictions.

This crash is a significant event that will have far-reaching implications for the global aviation insurance industry. Sources