Global Reinsurers Settle $125 Million Air India Boeing 787 Hull Loss Claim.

Global reinsurers have paid Air India approximately $125 million for the hull and engine loss of the Boeing 787 Dreamliner. This aircraft was completely destroyed in the June 12 crash near Ahmedabad, India. The payment covers the physical loss of the aircraft and its powerplants. This settlement marks one of the largest single claims in aviation insurance history.

Hull and Engine Settlement Details

The initial $125 million aviation hull loss claim includes $80 million for the airframe. Another $25 million was paid for the two lost engines. Indian general insurance companies and Global reinsurers settlement partners completed this portion. The lead reinsurer for the policy is multinational AIG. Other major reinsurers include Axa and Allianz. The primary insurer, Tata AIG General Insurance, holds a significant share. However, global reinsurers cover nearly 95% of the risk, limiting the domestic insurers' financial exposure.

One engine was new, used temporarily while another was serviced. That old engine now belongs to the reinsurers. They can sell the recovered engine to recoup some costs. The $125 million Air India insurance payout is now fully settled for the aircraft itself.

Complex Liability Claims Pending

The total estimated cost of the Ahmedabad air crash compensation is much higher. Indian reinsurer GIC Re estimates the total claim could reach $475 million. This includes an estimated $350 million for Air India liability claims. These claims cover the 260 fatalities, including passengers and crew. An initial $25 million has been released for immediate passenger compensation. However, the full process remains incomplete.

Liability claims are complex and will take time to settle. They involve litigation in both Indian and overseas courts. The flight, AI-171 from Ahmedabad to London Gatwick, was international. Therefore, the claims are governed by the international framework.

The Role of the Montreal Convention

International liability is governed by the Montreal Convention. This treaty sets a two-tier system for passenger compensation. Airlines are strictly liable for proven damages up to a certain limit without proof of fault. As of December 2024, this limit is 151,880 Special Drawing Rights (SDRs) per passenger for death or injury.

Crucially, the Convention allows for unlimited compensation if airline negligence is proven. The deceased included nationals from India, Britain, Canada, and Portugal. This mix of nationalities makes legal proceedings in international courts likely. The final compensation amount could increase if maintenance or other negligence is established.

Impact on the Aviation Insurance Market

This major claim is expected to harden the aviation insurance market. Reinsurers will likely reassess risks for wide-body aircraft like the Boeing 787 Dreamliner crash. Pricing models may be adjusted, and terms could become stricter globally. The incident highlights the massive financial risk borne by the global reinsurance sector. The $20 billion hull and $1.5 billion liability policies of Air India demonstrate the scale of coverage required by major carriers. The high level of reinsurance ensures that no single entity, including the primary Indian insurers, faces catastrophic financial loss.

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