The fatal crash of Air India flight AI171 on June 12th has become a pivotal moment for the already tightening global aviation reinsurance market. This tragic accident marks the first-ever fatal hull loss of a Boeing 787 Dreamliner, considered one of the most advanced and safest models of the company.
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The unprecedented nature of this event is expected to send ripple effects across the global aviation insurance market, significantly impacting insurers and reinsurers in India and globally, says GlobalData, a leading data and analytics company
Swarup Kumar Sahoo, Senior Insurance Analyst at GlobalData, comments: “The domestic aviation insurance direct written premium (DWP) stood at $127.8 million in 2023 and claims from this single event could potentially exceed the entire domestic annual premium for the aviation market in India. 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.”
“Historically, Indian aviation insurance has been loss-making due to a rise in the number of air accidents. Prior air accidents, such as accidents damaging the aircraft parts of Jet Airways, and SpiceJet, and the crash of Su-30 fighter jet have made aviation insurance in India loss-making during 2016-20. This incident will further deteriorate the loss-making Indian aviation insurance market.”
Sahoo adds: “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. This will harden the 2026 reinsurance renewal as reinsurers are expected to reassess agreement structures.”