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The Hindu
12-06-2025
- Business
- The Hindu
‘Air India plane crash likely to lead to hardening of aviation insurance market'
The Air India A1-171 Boring 787 Dreamliner crash at Ahmedabad on Thursday, which has been termed as 'significant incident' in the insurance industry is expected to influence aviation insurance rates going forward, said insurance industry officials 'The general aviation insurance premium market in India is estimated at around ₹900 crore. While most large losses are reinsured, this event is expected to influence aviation insurance rates going forward,' said Amit Agarwal, CEO & MD Howden, India. Narendra Bharindwal, President, Insurance Brokers Association of India (IBAI) said the liability coverage, especially for flights operating in or to regions like Europe—typically exceeds $500 million. 'This incident, along with others in recent months, will likely result in a hardening of the aviation insurance market, not just for the airline involved, but across the entire aviation sector,' he added. Stating that aviation insurance programmes for major airlines such as Air India are arranged on a fleet basis and reinsured across international markets like London and New York, he said no single insurer bears the entire risk. 'Coverage is widely distributed among global reinsurers, with shares as small as 1.5% to 2% and a lead reinsurer typically taking 10-15%,' he said. 'The financial impact of such incidents is shared globally across this network. While immediate premium adjustments are unlikely, the cumulative effect of multiple aviation incidents worldwide—including this one—will influence renewal terms and premiums for the sector in the next underwriting cycle,' he emphasized Aviation policies are comprehensive all-risk policies that provide coverage to airlines during incidents—such as the one involving the Air India aircraft. 'This incident is likely to trigger multiple aspects of a typical aviation hull all-risk policy. Aircraft damage would be covered under the aviation hull all-risk section, which insures the current valuation of the aircraft, including spares and equipment,' said Mr Agarwal. For a Dreamliner, depending on its configuration, age, and other factors, this value could range between $211 million and $280 million. 'The aircraft involved (VT-ABN) was a 2013 model and, based on available information, was insured for approximately $115 million in 2021. Whether the damage is partial or total, the loss would be covered based on the value declared by the airline,' Mr Agarwal said. Airlines typically purchase an add-on Hull War risk cover, which is triggered if the loss results from a terrorist act or war-related event. In such cases, the loss would be covered under the Hull War section. The liability section—likely the most significant component of the loss in the Ahmedabad incident—could amount to millions of dollars. 'This section covers the airline's legal liability to passengers and third parties, including medical expenses, cargo, and baggage losses. Early reports suggest the aircraft crashed into a civilian compound, which could result in substantial third-party claims,' he said. While interim compensation may be announced by the airline, final compensation for passengers will be determined under the Montreal Convention of 1999, to which India became a signatory in 2009. 'Compensation is calculated using Special Drawing Rights (SDRs), which stood at 128,821 SDRs (approximately $1.33 per SDR) as of October 2024. The actual payout will depend on the coverage purchased by Air India,' he added. According to Sourav Biswas, Business Head – Aviation Insurance at Alliance Insurance Brokers in the case under discussion, the estimated total loss is around $130 million—$80 million for the aircraft and approximately $50 million for liability claims. 'Since the aircraft is considered a total loss, meaning it cannot be salvaged or repaired, the entire insured sum is likely to be claimed,' he said. He said large Indian carriers like IndiGo typically insure aircraft for around $80–100 million each, with a liability limit of up to $1 billion per incident. 'Their annual premiums may range around $17 million. As reinsurers evaluate country-level aviation risk portfolios, even isolated events can influence future coverage terms for the entire region,' Mr Biswas said. 'In this case, only about 10% of the total risk is held by Indian insurers such as Tata AIG, New India Assurance, and ICICI Lombard. The majority—close to 90%—is reinsured by London-based underwriters and syndicates like Liberty and Civil Star,' he said. 'GIC Re is also believed to hold a share of the risk. While a single claim of this nature may not immediately alter insurance premiums, repeated incidents can lead to detailed risk reassessments, especially concerning aircraft maintenance and operational practices,' he added. Hitesh Girotra, Vice President - Aviation & Specialty Lines, Prudent Insurance Brokers said since, the Aircraft crashed into a residential apartment, there is 3rd Party Property Damage Liability on the Operator. 'There might also be loss of lives in that residential apartment where the Aircraft crashed,' he emphasized. 'While the Hull component is easy to ascertain, understanding it to be an agreed value policy; but it is too early to ascertain the overall Liability (Passengers and Third Party) on the operator because of this crash,' he added. Commenting on this incident Sonam Chandwani, Managing Partner, KS Legal & Associates said in the event of an air crash, the families of victims in India have the legal right to claim compensation under both domestic law and international agreements like the Montreal Convention. 'They are entitled to a fixed amount without needing to prove fault, and can pursue higher compensation by showing negligence on the part of the airline or related entities. Indian courts also recognize claims for emotional distress, loss of income, and other long-term impacts on dependents,' she said. Families may receive interim relief payments and have up to two years to file legal claims. 'These rights aim not only to provide financial support but also to ensure accountability and justice for those affected by aviation tragedies,' she added.
News18
03-06-2025
- News18
Flight Delays, Floods, And Cancellations: What Travel Insurance Really Covers
Last Updated: Experts stress the need for comprehensive travel insurance in India due to rising climate uncertainty. Discover what it covers and why it's essential. Travel Insurance In India: When planning trips to domestic or international destinations, the idea of purchasing travel insurance rarely crosses the minds of many Indian travelers. They often consider it an unaffordable luxury due to budget constraints. However, unpredictable weather and increasing climate uncertainty are starting to change this perspective. Experts say the need for comprehensive coverage is growing, especially in the face of rising climate uncertainty. What Does Travel Insurance Cover? Travel insurance is traditionally known for covering medical emergencies, accidents, and loss of baggage or documents. However, its importance during weather-related disruptions is being increasingly considered. 'Flights may be cancelled for various reasons, including inclement weather, but travel insurance doesn't cover weather itself—it covers the consequences like trip cancellation or delay," explains R Balasundaram, Secretary General of the Insurance Brokers Association of India (IBAI). He also clarifies that cancellations by tour operators in package trips are not recoverable under most policies. Extreme Weather and Claims According to Vivek Chaturvedi, CMO & Head of Direct Sales at Digit Insurance, 'Flight delays and trip cancellations are the most common claims during extreme weather events like floods or heavy rain. Such incidents directly disrupt travel plans and trigger insurance claims if delays exceed the minimum time specified." He adds that travel insurance can also support in rare but severe cases like accidents at airports or natural disasters. Post-pandemic and amid climate disruption, travelers are opting for more robust insurance. 'Many now prefer higher sum-insured policies—ranging from $250,000 to $500,000—to cover medical costs, fraud, or last-minute cancellations," Chaturvedi says. First Published: June 03, 2025, 11:09 IST
The Hindu
21-05-2025
- Business
- The Hindu
Spurt in premiums for war, political violence cover post Pahalgam attack
Following the terrorist attack at Pahalgam in April and the subsequent ceasefire earlier this month, insurance premiums for war and political violence cover available for Indian companies have risen 'significantly,' according to insurance brokers. Though Indian insurers are not offering any property insurance policies for war and conflicts to Indian corporates, policies covering war and political violence are being made available from international reinsurers which had been issued with stricter limits and conditions. Deepak Madan, Head Commercial Lines, Large Account Practices at Prudent Insurance Brokers said, 'Property insurance policies for war and conflict-related situations are typically excluded from insurance cover so there was no impact at all in premium. And thus geopolitical tensions usually do not influence premium rates.' 'But several companies had purchased war and political violence coverage which is a reinsurance-backed cover, available primarily through international markets. The availability and terms of coverage also vary according to the property's location, particularly in high-exposure areas such as Jammu and Kashmir and other border regions,' Mr. Madan said. Hari Radhakrishnan from Insurance Brokers Association of India (IBAI) said since the geopolitical risk had gone up considerably due to various conflicts such as Ukraine, Gaza, Iran and wider Persian Gulf, and Indo-Pak., there had been a downstream impact on insurance and reinsurance markets. 'Since these conflicts can affect oil prices or commodity prices, there can be impact on underwriting and claims in the form of increased costs, increased restoration periods, logistical challenges. Insurers and reinsurers have to factor these into their operating considerations,' he said. He said since the Indo-Pak. conflict is new and still developing even though there is a pause in active hostilities or live action, the impact might be less visible in the immediate term but could be more visible on a longer-term basis. On the impact on the supply chain due to disruptions caused by geopolitical developments, he said, 'When there are supply chain disruptions, certain insurance products such as trade credit insurance, contingent business interruption covers [coverage for suppliers and customers premises] , see a demand spike which is also being witnessed.'
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Business Standard
09-05-2025
- Business
- Business Standard
India-Pakistan conflict: Your insurance policy may not cover 'act of war'
Does your life or term insurance policy cover claims arising from an 'act of war'? With tensions between India and Pakistan on the rise, now may be a good time to review your insurance documents and reassess whether your financial protections are still adequate. According to Narendra Bharindwal, president of the Insurance Brokers Association of India (IBAI), most life and term insurance policies do not. 'Standard life or term insurance policies typically exclude deaths caused by war or war-like operations,' said Bharindwal. 'There's usually a 'war exclusion' clause built in that applies to civilians as well as active military personnel.' The war exclusion clause — War, whether declared or undeclared — Invasion or act of foreign enemy — Hostilities, civil war or rebellion — Insurrection or any similar events This means that even if the policy is active and all premiums are paid, a death resulting from these causes may not be covered. 'If a person dies in a bomb explosion in an active conflict zone abroad, and it's traced back to a war-related event, the insurer can reject the claim,' said Bharindwal. 'But if the death was from an unrelated cause, like an illness or accident, the claim might still go through.' Sandeep Katiyar, co-founder and CFO of Finhaat, explained further. 'Insurers typically have war exclusion clauses baked into the terms,' he said. According to him, claims may be rejected if death results from: — Participation in war or war-like operations — Terrorist activities — Acts of foreign enemies or invasions — Being in a known conflict zone, even if not directly involved However, he added, 'If an Indian expat living in the Middle East dies of a heart attack, and there's no link to the ongoing conflict, the claim can still be honoured — provided there are no geographical exclusions in the policy.' Are there exceptions? 'Some group term insurance plans for defence personnel or corporate insurance for employees posted overseas may include specific cover for such risks,' said Bharindwal. 'But these aren't standard and usually need custom underwriting.' Government bodies like LIC or the Army Wing offer war-risk cover to military personnel through schemes like Armed Forces Group Insurance. Civilian policies from private insurers, on the other hand, usually stay away from war-related coverage. Katiyar said some corporate policies — especially in high-risk sectors like oil and gas, media, or diplomacy — may be customised to include group accident or life cover with such provisions. High-risk international travel policies from general insurers such as Tata AIG or ICICI Lombard may include terrorism cover, but under health or personal accident categories — not life insurance. What policyholders should check Katiyar listed a few things individuals should watch for in their policy documents: — Read all exclusions carefully, especially those mentioning war, terrorism, or high-risk jobs — Check for optional add-ons like accidental death or terrorism cover — Review territorial limits — some policies exclude coverage outside India — For NRIs, confirm whether being in a high-risk area affects claim eligibility 'If you see terms like 'acts of war', 'civil commotion' or 'terrorism' in the exclusion section, it's a red flag,' he said. 'Clarify with your insurer.' He added that policyholders living or working in high-risk zones should consider: — Comprehensive international life insurance that includes conflict zones — AD&D (Accidental Death and Dismemberment) riders with terrorism cover — Group insurance negotiated by employers with explicit war-risk inclusions — Global insurers who state inclusion of conflict zones, subject to certain conditions 'Most importantly, always declare your location and job profile truthfully. If you leave that out, the insurer might reject the claim later — even if the death wasn't war-related,' said Katiyar.
