As surveyors and lawyers from London, appointed by reinsurers of Air India policy, are now camping in Ahmedabad to take stock of devastation and prepare various loss reports including Hull and passenger liability so that re/insurers will start paying claims, it is being realised that the liability claims will be almost three times of claims from that of Hulls and engine
London/Mumbai: With 270 lives lost already, including 241 passengers and the aircraft completely destroyed, the devastating crash of Air India’s London-bound Flight AI171 near Ahmedabad on last Thursday (12 June 2025), involving a Boeing 787 Dreamliner, is likely to trigger around $470 million ( around Rs 4,000 crore) of claims, one of the largest in the world.
As surveyors and lawyers from London are now camping in Ahmedabad to take stock of devastation and prepare various loss reports including Hull and passenger liability so that re/insurers will start paying claims, it is being realised that since there many foreign passengers, the liability claims will be almost three times of claims from that of Hulls.
According to preliminary estimation, Hull will cost re/insurers $ 80 million, for Engine there will be another $45 million but the total liability insurance claims for passengers and people who lost lives outside, numbering around 270 till now, will be around $350 million, said GIC Re sources, which has a five per cent share in Air India’s reinsurance policy.
Liability claims will be covering passenger deaths, crew, and third-party damages. The liability portion also includes compensation for individuals affected on the ground and will be governed by international frameworks such as the Montreal Convention, which allows for unlimited compensation in cases of proven airline negligence.
Among 230 passengers who were onboard, there 169 were Indians, 53 British, seven Portuguese and one Canadian. The other 12 people on board were two pilots and 10 crew members.
Air India is obligated to make prompt payments, interim advance payments, soon after the accident which may include Rs 10 lakh per victim via insurers to be followed by final settlements after investigations and loss assessment (linked to dependents, age, income) to the families of the air accident victims.
Jurisdiction & Legal Considerations:
-Families can bring claims in the following jurisdictions:
– Carrier’s domicile (India)
-Destination country (UK)
-Place of ticket purchase if Air India has offices there
-Principal residence of the victim (e.g., UAE, UK)
-This flexibility allows claimants to choose the most favorable legal venue.
-If Air India, Boeing, or GE(engine manufacturer) found at fault, payouts could double or triple.
-If Boeing/GE are found fault, engine/flap faults could shift liability (and compensation) toward manufacturers.
-Additional lawsuits under Indian domestic law for damages on the ground. including property damages
-Suits may be filed in UK/UAE/Canada jurisdictions offering more advantageous rulings.
“Settling all kind of liability claims will be complicated and long drawn process,’’ said sources in London.
`Right now, we have made extensive arrangements in Ahmedabad including hospitals and Third Party Administrators(TPAs) so that injured patients can avail treatments freely,’’ said Air India sources.
Earlier, it was expected the total insurance payout combining hull and liability exposures may cross Rs 1,000–1,600 crore, depending on final settlements and legal claim.
Air India had renewed its mega $20 billion insurance policy( for Hull) $1.5 billion liability policy with multinational AIG as the lead reinsurer since Apr 1. Almost 95 per cent of the Air India policy has been reinsured with a clutch of reinsurers led by AIG, Axa and Allianz.
“The crash is anticipated to cost the insurance industry more than $200 million, including the aircraft, which is valued between $75 million and $80 million, and the liability exposure under the Montreal Convention and domestic legislation,” commented Swarup Kumar Sahoo, senior insurance analyst at GlobalData, the London-based data and analytics company, in a statement.
“This will harden the 2026 reinsurance renewal as reinsurers are expected to reassess agreement structures,” he said.
There Indian legal precedents under Montreal and domestic law
-Carriage by Air Act, 1972: Implements the Montreal Convention domestically via Section 4A of the Third Schedule .
-S. Abdul Salam v. Union of India (2011) upheld strict liability under air carrier norms .
-Kerala High Court (case during 2009) awarded between Rs35 lakh and Rs 7.75 crore per case using a combination of Montreal and domestic carrier compensation.
These cases affirm that Indian courts recognize Montreal’s dual-tier liability framework and award larger payouts under the more victim-friendly tier if negligence is proven.
The fatal crash of Air India flight AI171 on June 12, 2025 is expected to send ripple effects across the global aviation insurance market, significantly affecting insurers and reinsurers in India and globally, according to GlobalData,
The accident resulted in the death of 241 passengers and crew members and marks the first-ever fatal hull loss of a Boeing 787-8 Dreamliner, considered one of the most advanced and safest airliners of the company.
Although New India Assurance and Tata AIG are the major insurers covering the risk, the impact of this incident on the domestic market is limited as both the insurers generated only 1.1% and 1% of their total insurance premium from aviation and ceded most of it to global reinsurers, said GlobalData, citing statistics from its Insurance Database.
“Reinsurers are expected to reassess risks associated with wide-body aircraft, recalibrate pricing models, and impose stricter terms,” said Sahoo. “This will reinforce market discipline, accelerate the withdrawal of marginal capacity, and reshape aviation reinsurance arrangement negotiations for the 2026 renewal cycle.”
Historically, Indian aviation insurance has been loss-making due to a rise in the number of air accidents, the GlobalData report added.
Prior air accidents, such as accidents damaging the aircraft parts of Jet Airways and SpiceJet, as well as the crash of Su-30 fighter jet (in 2024) have made aviation insurance in India loss-making during 2016-2020, said GlobalData, noting that this incident will further deteriorate the loss-making Indian aviation insurance market.
In the 2020 Kozhikode crash of an Air India Express Boeing 737‑800, Rs 373 crore ($51 million) was paid for hull loss by primary insurers led by New India Assurance , with total payouts reaching Rs 660 crore including liability.