India recently experienced its deadliest plane crash in over a decade, resulting in a staggering ₹39.4 billion insurance claim, making it one of the largest in the country's aviation history.

Ramaswamy Narayanan, Chairman and Managing Director at General Insurance Corporation of India, stated that this aviation insurance claim could potentially be one of the biggest in India's history. General Insurance Corporation of India is among the insurance firms that provided coverage for Air India.

The insurance claim covers damage costs, with estimates of around $125 million for the aircraft hull and engine, and an additional $350 million for liability claims related to loss of life for passengers and others. These costs surpass the annual premium for the entire aviation industry in India in 2023, as per Bloomberg data.

The financial impact of the crash, which claimed the lives of 241 individuals on board and on the ground in Ahmedabad, is expected to have repercussions on the global aviation insurance and reinsurance market. This incident is also likely to lead to increased insurance costs for airlines in India, according to Bloomberg.

Following the crash, insurance premiums in the aviation industry in India are anticipated to rise, either immediately or during policy renewals, sources familiar with the matter told Bloomberg.

Regarding the Air India insurance payout, the total costs could escalate due to the involvement of foreign nationals in the accident. The calculation of these claims will follow the regulations of their respective countries, as reported by Bloomberg.

Insurers are set to first settle the hull claim, followed by the liability claims. Narayanan mentioned that it will take some time for the liability claims to be resolved.

The financial burden will primarily be borne by international reinsurers, reducing the impact on the domestic market. Both companies involved in the insurance coverage derived only about 1% of their total premium from aviation and ceded most of it to global reinsurers, based on Bloomberg's data.