India’s worst aviation disaster in over a decade has triggered one of the country’s largest-ever insurance claims, with an estimated payout of ₹39.4 billion ($475 million). The fallout from the Air India AI171 crash, which killed 241 people and caused destruction in a densely populated part of Ahmedabad, is sending ripples through the global aviation insurance and reinsurance sectors.

According to Ramaswamy Narayanan, Chairman and Managing Director of the General Insurance Corporation of India, the incident may go down as one of the costliest in India’s aviation history. The insurance coverage includes an estimated ₹10.44 billion ($125 million) for the aircraft’s hull and engine damage, while the liability claims to loss of life and injuries are expected to reach ₹29.23 billion ($350 million).

These combined costs are more than three times the total annual aviation insurance premiums collected across India in 2023, signaling a seismic shift in the risk landscape. Bloomberg reported that the crash is likely to lead to higher premiums for all Indian airlines, especially when it comes time for policy renewals.

Industry experts also noted that the financial burden will largely fall on global reinsurers. Indian insurers typically offload more than 95% of their aviation- risk to international partners. This strategy, while insulating domestic players from massive direct losses, is expected to drive a global hardening of the aviation insurance market, making policies more expensive and selective worldwide.

Further complications could arise as foreign nationals were among the crash victims, which means some liability claims will be subject to compensation laws from their respective countries. Settlements will begin with hull damage, followed by the more complex liability claims, according to Narayanan.

As investigations continue into what caused the Boeing 787 crash, its financial aftershocks are already reshaping the aviation insurance industry, both in India and abroad.