Insurance payout for passengers of Air India's crashed plane to be governed by Montreal Convention: Experts

New Delhi, Jun 12 (PTI) Insurance payout to dependents of passengers who died in the Air India plane crash at Ahemdabad will be governed by the applicable Montreal Convention of which India is a signatory, said experts.

The nationality of the passengers onboard will define the minimum liability applicable to the airline operator as per the Montreal Convention, Prudent Insurance Brokers vice president (aviation & specialty lines) Hitesh Girotra 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, brokerage firm Howden (India) MD and CEO Amit Agarwal said.

"Compensation is calculated using Special Drawing Rights (SDRs), which stood at 128,821 SDRs (approximately USD 1.33 per SDR) as of October 2024. The actual payout will depend on the coverage purchased by Air India," Agarwal said.

Earlier in the day, a London-bound Air India plane carrying 242 passengers and crew crashed moments after taking off from Ahemdabad International Airport. Of these, 169 are Indian nationals, 53 are British nationals, 1 Canadian national and 7 Portuguese nationals.

As far as aircraft damage is concerned, Agarwal said, it would be covered under the aviation hull all-risk section, which insures the current valuation of the aircraft, including spares and equipment.

For a Dreamliner, depending on its configuration, age, and other factors, this value can range between USD 211 million and USD 280 million, he said.

"The aircraft involved (VT-ABN) was a 2013 model and, based on available information, was insured for approximately USD 115 million in 2021. Whether the damage is partial or total, the loss would be covered based on the value declared by the airline," he said.

According to Narendra Bharindwal, president, Insurance Brokers Association of India (IBAI), 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.

"No single insurer bears the entire risk -- coverage is widely distributed among global reinsurers, with shares as small as 1.5 per cent to 2 per cent and a lead reinsurer typically taking 10-15 per cent. The financial impact of such incidents is shared globally across this network," Bharindwal said.

It is too early to ascertain the overall liability (passengers and third party) on the operator because of this crash. PTI DP HVA