Kathmandu. The Air India flight AI 171 crash in Ahmedabad on June 12, 2025, is estimated to cost around $475 million. This has made it one of the largest aviation insurance losses in India’s history.
The Boeing 787-8 Dreamliner was operating a scheduled flight from Ahmedabad to London Gatwick when it crashed in a densely populated area shortly after take-off. A total of 241 people, including passengers, crew and ground crew, were killed and dozens injured. One passenger survived the accident.
According to insurance industry estimates, total losses are expected to include both liability claims. Damage to the plane and its engines is estimated to be around $125 million. This part of the claim has already been processed through a combination of Indian insurance companies and international reinsurance companies.
Most of the losses are expected to come from claims related to passenger deaths, crew compensation, third-party property damage and ground injuries. Market estimates suggest that these claims could reach $355 million.
Air India’s aviation insurance program, which was renewed till early 2025, was managed in-house by TATA AIG General Insurance. In which there was a significant share of international reinsurance. Industry sources indicate that about 95 percent of the airline’s aviation risk was passed on to global reinsurers, including firms such as AIG, AXA and Allianz.
The crashed aircraft is said to have received increased insurance coverage following a recent engine replacement, and the plane’s coverage is believed to have reached approximately $101 million.
In the weeks following the crash, Air India and parent Tata Group announced interim compensation measures for the affected families. An initial payment of approximately $30,000 has been made to the families of the deceased passengers and the affected land victims. The Tata Group has also pledged an ex-gratia compensation of approximately $119,000 for each deceased victim, in addition to medical assistance, welfare assistance and setting up of a memorial trust. These voluntary payments are separate from formal insurance obligations under the Montreal Convention. It sets basic compensation criteria for international air travel accidents. The final indemnity amount may ultimately depend on the outcome of the negotiated contract or litigation.
According to reports, Air India has started offering full and final settlement packages to some families, subject to waiver agreements that limit future legal claims against airlines and other parties in certain cases. Legal advisers have advised affected families to carefully review such settlements before accepting them.
Meanwhile, Life Insurance Corporation of India and other insurance companies have simplified the documentation requirements to speed up the processing of life insurance claims for the affected insurers. Beyond its tragic human impact, the AI171 outbreak is expected to pose a major test for India’s aviation insurance and reinsurance framework. Industry experts say the magnitude of the damage highlights the importance of a global risk-sharing arrangement in the management of dangerous aviation incidents. ’
The investigation into the cause of the crash is still ongoing, and its findings are expected to impact aviation safety protocols, underwriting practices and insurance pricing across the region in the future. –Agency
