The crash of Air India Flight 171 near Ahmedabad on June 12 is poised to become one of the most significant aviation insurance events in recent memory, placing mounting operational and reputational pressure on both Indian and international insurers.
The aircraft, a Boeing 787-8 Dreamliner operating a scheduled service to London Gatwick, came down shortly after take-off, striking a residential building associated with the BJ Medical College. All 242 persons on board—comprising 230 passengers and 12 crew—were subject to the crash impact, while ground-level fatalities and injuries have also been reported. Authorities have confirmed that nationals of the UK, Portugal, and Canada were among those aboard.
India’s insurance regulator, the Insurance Regulatory and Development Authority of India (IRDAI), responded swiftly. Insurers have been instructed to fast-track claim settlements without the customary insistence on documents such as First Information Reports (FIRs) or post-mortem reports, provided deaths are officially confirmed. Companies are also required to cross-reference the passenger manifest with their existing policy databases for overseas medical, life, and personal accident cover.
A coordination cell is being set up at the primary hospital where victims are being treated. This cell, to be jointly run by the Life and General Insurance Councils, will act as a liaison point between claimants and insurers. Each insurance company has been asked to appoint a senior nodal officer, and weekly reports on claims progress are to be submitted to the regulator from mid-June onwards.
The aircraft was reportedly covered under a $20 billion aviation policy led by Tata AIG General Insurance, with significant risk ceded to both domestic co-insurers and the global reinsurance market. The policy is believed to have a $30million premium, with an increased limit, up from last year’s $10 billion. Tata AIG is understood to retain a meaningful proportion of the risk, with reinsurers such as GIC Re also expected to be materially exposed. The policy reportedly includes both hull and liability components, covering the airline’s fleet under a comprehensive programme.
While the aircraft hull loss - estimated at approximately $80 million - may be indemnified within a matter of months, liability claims involving passengers and third parties are expected to take significantly longer to resolve. Given the multinational composition of the passenger list, legal proceedings may unfold across multiple jurisdictions, invoking the framework of the Montreal Convention. Under the convention, the minimum compensation per deceased passenger could reach up to 128,821 Special Drawing Rights – about $171,000.
Industry analysts note that while initial ex-gratia payments or standard compensation may be issued by the airline, individual legal actions are likely to follow in some cases. Air India has already announced that it will pay interim compensation of ₹1 crore (around $116,000) for the families of those who died. Claims may be influenced by victims’ earning capacity, nationality, and the legal context in which suits are filed. The total liability could range from $211m to $280m, according to estimates reported by Press Trust of India.
Meanwhile, several Indian life insurers - including LIC, HDFC Life, and SBI Life - have publicly confirmed procedural relaxations for families of victims. These include waiving the requirement for standard death certificates and accepting documentation from municipal or hospital authorities as valid proof of death.
The incident is also expected to reverberate through the global aviation insurance and reinsurance markets, which have already been contending with rising rates due to geopolitical tensions and increasing attritional losses. Should substantial third-party liabilities emerge, Flight 171 could become a pivotal case in future pricing and underwriting decisions.
