AIG has set the market reserve for the Air India crash in June at $410mn, pointing to prospects for a sizeable loss for aviation insurers, Insurance Insider can reveal.
At these levels, Air India is likely to start to impact excess-of-loss reinsurance programmes.
An ongoing investigation into the cause of the crash means that following markets have been notified on both Air India’s AIG-led all-risks policy and its Axa XL-led aviation hull war cover, sources said.
As this publication reported last week, the insured hull losses stemming from the disaster could fall on the aviation war market if investigators determine the pilot acted with deliberate intent.
Market sources have pointed to the hull of the aircraft being valued at $80mn, meaning that, if pilot action is found to have caused the crash, the all-risks market would be liable to pay $330mn in liability losses from the fatal aircraft crash.
Air India Flight 171 was a scheduled passenger flight – from Ahmedabad Airport in India to London Gatwick Airport in the United Kingdom – that crashed 32 seconds after take-off on 12 June 2025.
All but one of the 230 passengers and all 12 crew members died. On the ground, 19 people were killed and 67 were seriously injured.
AIG and Convex both have 15% lines on Air India’s all-risks Willis-placed programme, which is co-brokered by AJ Gallagher.
As this publication has previously explored, Air India’s panel of insurers has shrunk in recent years, with several lead aviation carriers no longer writing the account due to the licensing and taxation involved in writing business in India.
Because the Air India panel includes fewer carriers that write larger lines than rival airlines of a similar size, any losses will be felt more acutely by those on the slip.
The preliminary report into the 12 June crash raised concerns over one of the pilot’s actions in the moments leading up to the crash and prompted questions about whether the crash could have been deliberate. Fuel switches were found to have been turned off after take-off, although no final determinations have been reached on what led to this occurrence.
In cases where the cause of the loss isn’t clear, a “50/50 clause” can kick in. This provision splits liability for the hull loss equally between the all-risks and hull war insurers while investigators determine the true nature of the crash.
The Air India programme is written on a primary basis by a group of local carriers and then reinsured into the London market, with a 5% obligatory cession to GIC Re.
The Air India loss is the latest major loss to hit the airline insurance market.
Loss reserves have been set for the fatal Jeju Air crash at the end of December 2024 at $340mn.
Insurance Insider revealed that Axa XL leads the cover with a 15% line on the Gallagher-placed all-risk reinsurance programme, with sizeable participation from Nexus, Elesco and Helvetia on the placement.
It is understood that reserves have not yet been set for the American Airlines flight that crashed in Washington in January as negotiations with the US government to reach a settlement remain ongoing. Any settlement reached could significantly reduce the aviation insurance market’s expected payout of more than $1bn.
Air India, AIG, Axa XL and Willis declined to comment.