Air India plane crash to harden aviation reinsurance market: GlobalData

The fatal Air India plane crash on June 12, 2025, is expected to harden the aviation reinsurance market, with reinsurers likely to reassess risks related to wide-body aircraft, adjust pricing models, and impose stricter terms, according to GlobalData.

Last Thursday, the London-bound Air India Boeing 787-8 Dreamliner crashed shortly after takeoff from Ahmedabad, India.

GlobalData said the unprecedented nature of this event will send ripple effects across the global aviation insurance market, significantly impacting insurers and reinsurers both in India and worldwide.

Swarup Kumar Sahoo, Senior Insurance Analyst at GlobalData, said, “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.”

New India Assurance and Tata AIG are the major insurers covering the risk. GlobalData noted that the impact of this incident on the domestic market is limited, as both insurers generate only 1.1% and 1%, respectively, of their total insurance premium from aviation and ceded most of it to global reinsurers.

Indian reinsurer GIC Re is exposed to about 5% of the incident’s risk due to mandatory ceding requirements.

GlobalData also highlighted that Indian aviation insurance has historically been loss-making, driven by several accidents, including damage to aircraft parts of Jet Airways and SpiceJet, as well as the crash of a Su-30 fighter jet.

The government is also considering grounding the Boeing 787-8 Dreamliner fleet, which could increase business interruption claims and directly impact insurers’ profitability.

Sahoo added, “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.

“Reinsurers are expected to reassess risks associated with wide-body aircraft, recalibrate pricing models, and impose stricter terms. This will reinforce market discipline, accelerate the withdrawal of marginal capacity, and reshape aviation reinsurance arrangement negotiations for the 2026 renewal cycle.”

This website states: The content on this site is sourced from the internet. If there is any infringement, please contact us and we will handle it promptly.