Air India Sees Modest Increase in Insurance Premium Despite Significant Crash
Premium Renewal Details
Air India has renewed its aviation insurance with only a modest increase in costs, recording an approximately 10% rise compared to the previous year. This adjustment comes despite one of the airline’s severest incidents in recent history, the Ahmedabad crash. The Tata group-owned carrier secured annual coverage with an estimated premium of around $33 million, up from approximately $30 million last cycle.
The renewal continues to encompass a comprehensive risk portfolio, covering around $20 billion in assets and liabilities over a fleet of nearly 300 aircraft. The airline’s liability coverage remains around $1.5 billion. Air India did not provide a response to inquiries from The Indian Express regarding the premium renewal.
Impact of the Ahmedabad Crash
Air India is currently addressing claims anticipated to reach $475 million from the tragic Dreamliner crash that occurred on June 12, 2025. The accident transpired shortly after take-off, resulting in the loss of 241 passengers and 29 fatalities on the ground. This incident stands as one of the most catastrophic aviation disasters in the airline’s history.
Despite the magnitude of the claims associated with this incident, insurance providers have not significantly adjusted their pricing structures. Market participants in London, a prominent center for aviation insurance and reinsurance, have attributed this trend to an ongoing softening in the global reinsurance market. Abundant capacity and competitive underwriting conditions have facilitated the absorption of substantial losses without sharply increasing premiums for major operators like Air India.
Insurance Market Dynamics
The 10% increase in Air India’s insurance premium highlights how global insurance dynamics—especially within aviation—can sometimes mitigate the financial impacts of major losses. This allows airlines to maintain financial stability while dealing with complex claims from significant incidents.
Some sources within the London insurance market indicated that Air India experienced a one-time penalty during renewal due to the extensive claims but faced no notable hikes in premiums from the same insurers that covered the airline in the past year.
Primary Insurers and Reinsurers
The primary insurers involved in Air India’s insurance policy include Tata AIG General Insurance (with a 45% share), ICICI Lombard General Insurance (7%), New India Assurance (32%), and Oriental Insurance Company (14%), among others. Nearly 95% of the airline’s policy is reinsured, with a group of reinsurers led by AIG, Axa, and Allianz, with GIC Re also contributing a 4% obligatory share.
Last year during renewal, while the total insured amount surged from $12 billion to $20 billion post the Vistara merger, the premium expenditures remained steady at around $30 million.
Aviation Insurance Trends
Globally, it was anticipated that aviation insurance premiums would experience a slight rise in light of multiple accidents that occurred in 2025. However, Air India successfully negotiated favorable rates due to the overall softness in the aviation insurance market. Insurance officials noted that the company’s adept negotiations played a crucial role in this outcome.
According to Willis, a leading global aviation broker, despite 2025 being challenging for airline insurers with frequent and costly claims, the broader insurance market might still exhibit resilience. Claims activity does not inherently diminish underwriting capacity, as not all insurers are involved in every claim. The abundant capacity has constrained rate increases. Between 2021 and 2024, airline insurers appeared broadly profitable, suggesting that 2025 might be viewed as an anomaly amidst favorable historical results and competition, which together may have suppressed rate hikes.
Overall Market Performance
Figures shared by the General Insurance Council reveal that the overall gross premium underwritten by Indian insurers decreased by 0.8% to Rs 1,089.27 crore during the financial year 2026. Among this, New India Assurance accounted for Rs 436 crore in FY26.
