Insurance premiums to rise in bad year for aviation, say experts
New Delhi It's a payout no one -- neither airliners nor passengers -- hopes would ever come to pass, but aviation insurance is set to get costlier amid rising risks and air fatalities, experts say.
Mishaps and war have already ratcheted up the stakes, capping a dream run of low, stable premiums, which are poised to jump this year. The lumbering Russia-Ukraine conflict, a spate of air accidents and the apparent start of an Israel-Iran clash have added significantly to those risks, an industry executive said, requesting anonymity.
Earlier this month, a UK judge ruled that insurance companies must compensate aircraft lessors and airliners for planes seized by Russia as part of its counter-sanctions reprisal, adding a new dimension to aviation insurance.
The year 2025 was already beginning to prove to be a tipping point with the Potomac River mid-air collision in the US this January. It shattered the calm of 2023 when no large plane was involved in a fatal accident, according to aviation groups. The encounter between American Airlines Flight 5342 and an army helicopter near Washington was the deadliest US disaster in over a decade.
'This changed sentiments dramatically in New York and London, two financial centres where the largest aviation reinsurance businesses are concentrated,' said Mathew Pannerselvam of Troth Broking Ltd.
The crash of Air India AI 171 outside Ahmedabad's airport on Thursday has already made 2025 the deadliest in a decade globally with over 480 fatalities, according to figures from the Virginia-based Flight Safety Foundation.
The London, Gatwick-bound Boeing 787 jetliner crashed moments after taking off, unable to power its initial climb and barely able to clear a neighbourhood just outside the runway.
Insurance payments to follow from the Air India crash are likely to be the costliest in Indian aviation history because of the extent of damages, including to properties on the ground and non-passenger fatalities, the executive cited in the first instance said. The accident resulted in the complete destruction of the aircraft and the death of all but one passenger.
The payouts could potentially reach nearly $100 million if the totality of liabilities is taken into account, said a second executive from Marsh India, an investment advisory firm, requesting anonymity.
The main insurer of the Air India Dreamliner was TATA AIG while several other firms underwrote part of the liabilities, including National Insurance and Oriental Insurance, a third industry analyst said, asking not to be named.
Most large insurers opt for reinsurance, an arrangement where the original insurance firms protect themselves against losses by transferring their own risks to a reinsurer at a cost. 'In aviation, this is the norm and very little risks remain with the original insurers,' one of the industry executives cited above said.
In the case of the AI 171 flight too, just about 10% of the liability will have to be borne by Indian insurers, whose aviation businesses are covered under a global reinsurance programme, the third analyst cited above said.
Aviation insurance is never a single product, analysts said. A commercial plane typically is covered by several types of risk packages. The most critical ones include cover for hull losses during flight and taxiing, as well as when an aircraft is stationary.
Passenger liability covers allow airliners to compensate the next of kin in case of fatal accidents. Tata Sons, the conglomerate that owns Air India, on Thursday announced that it would pay ₹1 crore to the next of kin of each passenger on board the fatal flight.
Airliners also need to take out a public liability policy for third-party compensation, just as in car insurance, to pay for damages caused to other aircraft, objects or people.
Insurance premiums make up no more than 1.5-2% of airlines' costs, very little compared to spending on fuel or maintenance, and premiums can range from $45000 to $150,000, depending on aircraft type, age and routes travelled, among other parameters, according to data from AerCap Holdings NV. The insured value of a commercial jetliner can range from $112 million to $230 million.
The insurance industry is 'good at adapting to changes' and risks from emerging wars were earlier considered 'second-order risks', Bruce Carnegie-Brown, the chairman of Llyod's of London, one of the largest aviation insurers, told Bloomberg last month.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Hans India
12 minutes ago
- Hans India
NIA chargesheets key aide of BKI terrorist Landa in Punjab terror conspiracy case
New Delhi: The National Investigation Agency (NIA) has filed a charge sheet against a key aide of designated terrorist Lakhbir Singh alias Landa of the banned Babbar Khalsa International (BKI) organisation and dreaded gangster Pavittar Batala in a Punjab terror conspiracy case. The aide identified as Jatinder Singh alias Joti is a resident of the Gurdaspur district of Punjab. He was arrested by the NIA from Mumbai on December 23, 2024, in the case RC-21/2023/NIA/DLI. The NIA had found during the investigation that Jatinder was involved in the illegal procurement and supply of firearms from Madhya Pradesh to Punjab-based gangsters. According to a press release issued by the agency on Sunday, "Jatinder Singh was facilitating the supply of weapons to ground operatives of Batala, a close associate of Designated Individual Terrorist Lakhbir Singh @ Landa. Batala's foreign-based associates were coordinating Jatinder's operations in India. The weapons were being used by Batala's operatives in Punjab to promote BKI's criminal-terror activities." It was further found during NIA investigations that Jatinder used to procure illegal weapons from a known arms supplier, Baljeet Singh alias Rana Bhai, in Madhya Pradesh. Baljeet had already been arrested and charge-sheeted by the NIA. The accused were using virtual numbers and encrypted applications to avoid detection. At the time of Jatinder's arrest in 2024, the NIA had said that this marked a major step forward in its efforts to dismantle the terror-gangster nexus by preventing the smuggling of arms, ammunition, explosives, etc., and raising funds for carrying out terrorist acts on Indian soil. The NIA is investigating the role of Landa as well as designated terrorist Harwinder Singh, alias Rinda and their foreign-based accomplices in the conspiracy. The Union Home Ministry has designated Lakhbir Singh Landa, a 34-year-old Canada-based gangster, as a terrorist under the stringent anti-terror law, Unlawful Activities (Prevention) Act (UAPA). Landa was involved in a rocket attack on the Punjab Police Intelligence Headquarters in Mohali in 2021, among other terrorist activities, according to the Union Ministry of Home Affairs (MHA). He fled to Canada in 2017.
Indian Express
15 minutes ago
- Indian Express
‘Israel almost a Russian-speaking country': Putin on Iran-Israel conflict amid US strikes on Tehran
Amid Israel-Iran conflict, Russian President Vladimir Putin has highlighted Israel's large Russian speaking population as one of the key factors in Moscow's approach as the United States struck Iran's three nuclear sites on Saturday night and joined Israel's offensive against Iran. Putin, while speaking at the plenary session of the St. Petersburg International Economic Forum (SPIEF), called out those who questioned Russia's commitment to its allies and termed them as 'provocateurs'. Putin further stressed that Russia's relations with the Arab and the Islamic world have traditionally been friendly. Putin was asked why he is not assisting Iran. His response: 'Israel today is almost a Russian-speaking country, two million people from the Soviet Union and Russia live there. We take that into account.' 👇 — Dr. Eli David (@DrEliDavid) June 21, 2025 Assessing the situation in the Middle East, Putin said 'I would like to draw your attention to the fact that almost two million people from the former Soviet Union and the Russian Federation reside in Israel. It is almost a Russian-speaking country today. And, undoubtedly, we always take this into account in Russia's contemporary history,' as reported by TASS news agency. While noting that every conflict is unique, Putin said that Russia has a nuanced relationship with its allies across the Middle East region. Putin stated that Russia's 15% population is Islamic and that Moscow is also an observer in the Organization of Islamic Cooperation. Putin had earlier offered to broker a ceasefire deal between Israel and Iran to resolve the impending conflict but US President Donald Trump had snubbed him by saying that 'I said, 'Do me a favour, mediate your own. Let's mediate Russia first.' I said, 'Vladimir, let's mediate Russia first. You can worry about this later.' Iran has warned to retaliate against the US strikes and has reportedly said that it would target US air bases in the region.
New Indian Express
17 minutes ago
- New Indian Express
Pahalgam attack: NIA arrests two men for harbouring LeT terrorists
As per NIA investigation, both Parvaiz and Bashir had knowingly harboured the three armed terrorists at a seasonal dhok (hut) at Hill Park before the attack. 'The two men had provided food, shelter and logistical support to the terrorists, who had, on April 22 afternoon, selectively killed the tourists based on their religious identity, making it one of the most gruesome terrorist attacks ever. Both Parvaiz and Bashir have been arrested under Section 19 of the Unlawful Activities (Prevention) Act, 1967. Further investigation in the case is going on," the NIA spokesperson added. On April 22, militants attacked tourists at Pahalgam's Baisaran meadows, which is also known as mini Switzerland. 25 tourists belonging to different states and a local pony wala Syed Adil Shah, who attempted to save tourists by snatching the rifle of one of the attackers, were killed in the terror attack. 16 people were also injured in the attack. The security forces suspect involvement of four militants, including three Pakistanis Hashim Musa alias Suleiman, Ali Bhai alias Talha Bhai, Asif Fauji and a local militant, Abid Hussain Thoker, a resident of Anantnag in the April 22 Pahalgam attack. Police has announced a bounty of Rs 20 lakh on the head of militants. The NIA has taken over the investigation of the case and NIA officials are camping in Pahalgam for investigations. The NIA chief Sadanand Vasant Date has also visited the attack site to review the pace of investigations. On May 7, the Indian military launched Operation Sindoor to target and destroy terror infrastructure in Pakistan and PoK to avenge the Pahalgam attack.
