Aviation experts have revealed that the Montreal Convention of 1999 will determine the insurance payouts for the nominees of passengers who lost their lives in the recent Air India plane crash in Ahmedabad. While Air India may provide an interim compensation, the final payouts will be based on the coverage acquired by the airline.

India, being a signatory of the Montreal Convention, will follow its provisions to calculate the liability applicable to the airline operator based on the nationality of the deceased passengers. The final insurance payouts will be determined under this Convention, which India joined in 2009.

According to Amit Agarwal, MD and CEO of Howden (India), compensation will be calculated using Special Drawing Rights (SDRs), currently valued at approximately $1.33 per SDR. The actual payout will be influenced by the insurance coverage purchased by Air India.

For the damaged aircraft, the compensation will be covered under the aviation hull all-risk section, including the current valuation of the aircraft, spares, and equipment. Depending on various factors, the value for a Dreamliner can range between $211 million and $280 million.

President of the Insurance Brokers Association of India, Narendra Bharindwal, explained that aviation insurance programmes for major airlines like Air India are arranged on a fleet basis and reinsured across international markets. The risk is distributed among global reinsurers, with no single insurer bearing the entire burden.

With Air India and IndiGo being the two Indian airlines operating Boeing 787 planes, the Air India fleet consists of 34 B787s, with 27 B787-8s being legacy aircraft. The financial impact of incidents like the recent crash is shared globally across the network of insurers and reinsurers.