Sourav Biswas, the business head of Aviation Insurance at Alliance Insurance Brokers, spoke to The New Indian Express on the financial risks and liabilities involved in flight accidents following the Air India plane crash at Ahmedabad. Excerpts:
What does airline insurance typically cover?
The cover typically includes three main components: physical damage to the aircraft, passenger legal liability, and third-party liability. Passenger legal liability is for injury or death of passengers, and third-party legal liability is for injury, death, or property damage caused to people on the ground. Both these liability claims are covered by the insurers and reinsurers.
How do such incidents impact aviation insurance premiums and risk assessments?
Incidents like the Air India flight crash can lead to a total loss, which means that the aircraft is completely destroyed, cannot be repaired, and has no salvageable parts. Estimated losses during such cases can go up to around $130 million — $80 million for the aircraft and $50 million for liabilities. These are approximate figures.
These impact premiums as underwriters also look for more stringent parameters, especially in terms of the flight’s condition, before issuing the policy.
Passenger legal liability ensures compensation for injuries or fatalities suffered during the incident, while baggage loss including electronics is also covered under airline insurance. Additionally, passengers with personal travel insurance may be eligible for further benefits, including emergency medical expenses and trip disruptions.
What does airline insurance typically cover when it comes to flight emergencies (including medical coverage, baggage, and in-flight emergency?)
During flight emergencies, passenger legal liability is provided, as mentioned, which covers accidental death or injury. In-flight medical emergencies are covered which provide medical coverage for first-aid treatment by crew, emergency landing costs and in rare cases, passengers may claim for medical expenses under the airline's public liability. Baggage coverage and third party liability is also provided.
What is the estimated value of the aircraft in such a case of total loss and who will bear the pay-out for the bulk (aircraft) loss?
The value is estimated to be between $75 to $85 million, and in the case of total loss (which this incident qualifies as), this full amount is payable. There are multiple insurers and reinsurers involved. For example, if the aircraft is worth 100 units, and there are 10 participants, each may bear 10% or 10 units. The bulk of the payment will come from foreign reinsurers. Indian insurers’ exposure is limited, estimated at around 10% or less of the total value.
What about other liabilities beyond the aircraft value and are these liabilities under Indian insurers or foreign reinsurers?
These fall under liability claims, which include passenger legal liability and third-party liability mentioned earlier.
It depends on the policy structure, but liability claims are also likely to be shared, with foreign reinsurers bearing the majority. Indian insurers will still have some exposure.
How soon can liability claim amounts be known and who is the largest aviation insurer in India?
Liability claims can take a long time to settle — typically 2 to 3 years or more, depending on legal proceedings. The largest player is New India Assurance. However, since Tata now owns Air India, Tata AIG has a larger share in insuring Air India’s fleet.
