India’s aviation insurance market is facing a sharp rise in premiums after the recent Air India crash. The incident has led insurers to tighten terms and raise costs, changing how aviation policies are being negotiated and renewed.
Premiums Rise Across Airlines
Premium rates are now up by 10 to 20 percent, depending on an airline’s claims record. Major carriers like IndiGo have already seen about a 10 percent hike. The same pattern extends to helicopters, private jets, and general aviation operators across India.
High-Value Coverage and Global Dependence
Aviation insurance in India involves large sums. Aircraft hulls are typically insured for $100–300 million, while third-party liability coverage ranges from $500 million to $1.5 billion. Indian insurers such as Tata AIG rely heavily on international reinsurers, especially those based in London, for capital and expertise.
Swift Settlements and Legal Delays
After the Air India crash, hull claims were settled quickly with an $82 million payout. However, liability claims are progressing slowly due to complex legal processes involving foreign nationals and international jurisdictions.
Regulatory Review and Industry Response
The Directorate General of Civil Aviation (DGCA) audit after the crash did not identify systemic flaws. Air India voluntarily paused select operations and resumed full services on October 1, 2025. Insurers have tightened clauses, but coverage standards remain globally aligned.
Market Outlook and Future Growth
India’s aviation insurance premium pool is estimated at Rs 800–1,000 crore, with Tata AIG leading among private insurers. Airlines contribute around 70 percent of this total. New growth areas include airport insurance, maintenance and repair, drones, and even space coverage. Still, the heavy reliance on foreign reinsurers continues to challenge the industry’s long-term resilience.
