Latest news with #VT-ABN
Mint
13-06-2025
- Business
- Mint
Air India plane crash: How is aviation insurance payout calculated? Will it be India's costliest? Experts decode
Air India Plane Crash: The Montreal Convention will be governing the insurance payouts to nominees of the passengers who died in the Air India plane crash in Ahmedabad on Thursday, experts have said. While Air India may declare an interim payout, the actual compensation will depend on the coverage purchased by the airline. India is a signatory of the Montreal Convention, applicable provisions of which will be applied while implementing the insurance payouts, they said, according to a report by PTI. According to Prudent Insurance Brokers vice president (aviation & specialty lines) Hitesh Girotra, the minimum liability applicable to the airline operator will be dependent on the nationality of the passengers who lost their lives. While an interim compensation may be announced by the airline, the final insurance payouts for passengers will be determined under the Montreal Convention of 1999, to which India became a signatory in 2009, brokerage firm Howden (India) MD and CEO Amit Agarwal said. "Compensation is calculated using Special Drawing Rights (SDRs), which stood at 128,821 SDRs (approximately $1.33 per SDR) as of October 2024. The actual payout will depend on the coverage purchased by Air India," Agarwal was quoted as saying by PTI. According to Amit Agarwal, the compensation for the Air India aircraft damage will be covered under the aviation hull all-risk section. This includes insurance for the current valuation of the aircraft, including spares and equipment. For a Dreamliner, depending on its configuration, age, and other factors, this value can range between $211 million and $280 million, he said. 'The aircraft involved (VT-ABN) was a 2013 model and, based on available information, was insured for approximately $115 million in 2021. Whether the damage is partial or total, the loss would be covered based on the value declared by the airline,' he said. According to Narendra Bharindwal, president, Insurance Brokers Association of India (IBAI), aviation insurance programmes for major airlines such as Air India are arranged on a fleet basis and reinsured across international markets like London and New York. 'No single insurer bears the entire risk -- coverage is widely distributed among global reinsurers, with shares as small as 1.5 per cent to 2 per cent and a lead reinsurer typically taking 10-15 per cent. The financial impact of such incidents is shared globally across this network,' he said. Currently, Air India and IndiGo are the two Indian airlines operating the Boeing 787 planes. Of the 34 B787s in the Air India fleet, 27 B787-8s are legacy aircraft. The first of the legacy B787-8 is slated to go for retrofit in July. The remaining seven B 787-9 joined the Air India fleet after the merger of Vistara with it last year. Globally, the Ahmedabad crash is the first time that hull loss has happened for a B787 aircraft, according to an official.
Time of India
13-06-2025
- Business
- Time of India
Air India crash may trigger over ₹1,000 crore in insurance claims, likely to be India's biggest
A recent Air India Boeing 787 Dreamliner crash near Ahmedabad, resulting in over 240 fatalities, is projected to trigger insurance claims exceeding ₹1,000 crore. This incident could become India's most expensive aviation insurance payout, with liability claims for passenger deaths and third-party damages expected to surpass the hull loss, impacting insurers and reinsurers globally. Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads The recent crash of an Air India Boeing 787 Dreamliner near Ahmedabad could result in insurance claims exceeding ₹1,000 crore, potentially becoming India's most expensive aviation insurance payout to date. The disaster, which killed over 240 people and caused extensive damage on the ground, has raised substantial liability and hull loss concerns for to insurance industry experts, while the age of the aircraft may help limit the hull loss component, the liability arising from passenger deaths and third-party damages is expected to be significant. The estimated insurance claims are likely to surpass the total annual premium collected for India's entire aviation insurance India's fleet is insured under a $20-billion aviation insurance programme. The policy covers both hull and liability and is underwritten partly by Tata AIG, a group company, along with other Indian insurers. The reinsurance of this risk is managed by a global consortium led by AIG, with backing from Indian public sector insurers like New India Assurance and GIC Re. Shares of both public sector firms dropped 4% and 3% respectively following the Agarwal, MD and CEO of Howden India, explained that the aircraft damage falls under the aviation hull all-risk section, which insures the declared value of the aircraft along with its spares and equipment. The Dreamliner involved in the crash, registered as VT-ABN and delivered in 2013, was insured for about $115 million as of 2021. "Whether the damage is partial or total, the loss would be covered based on the value declared by the airline," he liability claims are likely to surpass the hull loss. 'The liability section, which is likely the most significant component of the loss, could amount to millions of dollars,' Agarwal added, referring to compensation for the deceased passengers and any third-party claims arising from the crash the Montreal Convention of 1999, airlines are liable to compensate passengers based on Special Drawing Rights (SDRs). Currently, the compensation is pegged at 1,28,821 SDRs per passenger, or around $171, Girotra of Prudent Insurance Brokers pegged the hull value of the aircraft at $75–80 million, noting that multiple factors would influence the operator's liability. 'The nationality of the passengers will determine the minimum liability under the Montreal Convention. Additionally, there is third-party property damage and possibly loss of civilian lives where the aircraft crashed,' he scale and complexity of this claim underscore the evolving nature of aviation insurance, experts Bharindwal, president of the Insurance Brokers Association of India, said, 'Insurance coverage for large commercial aircraft such as the Boeing 787 is substantial and structured globally.' He added that hull values for such aircraft range between $200 million and $300 million, while liability cover on international routes often exceeds $500 India's insurance programme, like many others of its size, is reinsured across multiple global markets, ensuring that no single insurer bears the full burden of the risk.
