Air India Crash: AXA XL and Allianz Braced for Multi-Million Dollar Claims in Escalating Liability Battle
The tragic crash of Air India Flight 171 on June 12, 2025—a Boeing 787-8 Dreamliner en route from Ahmedabad to London—continues to ripple through the global insurance sector, with AXA XL and Allianz now facing potential claims amid a burgeoning U.S. lawsuit. The incident, which claimed 269 lives (including 230 passengers and 12 crew, plus 38 on the ground when the plane struck a medical college hostel), stands as India’s deadliest aviation disaster in over a decade and the first fatal mishap for the Dreamliner model. Preliminary investigations point to possible engine failure, with international teams from India’s Aircraft Accident Investigation Bureau (AAIB), the UK’s Air Accidents Investigation Branch, and the U.S. National Transportation Safety Board probing the cause. One British passenger, Vishwash Kumar Ramesh, miraculously survived.
A wrongful-death lawsuit filed in Delaware’s U.S. District Court on September 17, 2025, by four families of victims has thrust the spotlight onto the insurance towers backing Boeing and Honeywell, the aircraft’s engine supplier. The suit alleges that faulty fuel cut-off switches—positioned in a way that “effectively guaranteed inadvertent fuel cutoff during normal cockpit activity”—caused the crash, contradicting statements from Air India and the FAA that all airworthiness directives were met and the switches were not the culprit. This marks the first U.S. legal action over the tragedy, potentially opening the floodgates to multi-jurisdictional claims and forum-shopping by plaintiffs seeking maximum payouts.
Insurance Exposure: A $475 Million Powder Keg
Total insurance claims from the crash are projected to reach $475 million (approximately ₹3,940 crore), encompassing hull and engine damage (estimated at $300–350 million for the aircraft alone), passenger liability, third-party damages from the ground impact, and cargo losses. This could rank as one of India’s most expensive aviation insurance events, surpassing previous incidents like the 2020 Air India Express crash in Kozhikode. The aircraft’s hull value was recently hiked from ₹750 crore to ₹850 crore in April 2025, following an engine replacement, with the policy led by Tata AIG General Insurance and co-insured by Indian firms like GIC Re, United India, Oriental, National, and ICICI Lombard.
Over 90–95% of the risk has been reinsured globally, shielding Indian insurers (who retain just 7.5–10%, or ₹100–150 crore) from the bulk of the liability. Key players include AIG (leading the all-risks program), AXA XL (leading the aviation hull war cover with a 15% line on the Gallagher-placed reinsurance), and Allianz (providing aviation products liability coverage for Honeywell under policy A1PR000204824AM, effective through November 2025). Other reinsurers like Nexus, Elesco, and Helvetia also participate in the layers.
The U.S. lawsuit specifically implicates policies placed by brokers Marsh and Lockton, setting up a “collision” between product liability claims against Boeing/Honeywell and the insurers’ defenses. For victims’ families, potential payouts under liability sections could reach up to ₹1.5 crore ($180,000) per person, covering death benefits, medical expenses, baggage, and third-party losses. Bajaj Allianz has already processed four claims totaling ₹85 lakh (including travel and marine cargo policies), while LIC and others have relaxed documentation requirements like FIRs and postmortem reports to fast-track settlements.
Broader Industry Fallout: Premium Hikes and Market Hardening
The crash has already prompted a reserve of $410 million on Air India’s policies, with following markets notified pending the investigation’s outcome. Experts anticipate a 20–30% spike in aviation insurance premiums globally, driven by this event and rising air travel demand—Air India’s fleet alone is insured for $20 billion annually at $30 million in premiums. Allianz’s own report notes that crashes dominated $15 billion in global aviation claims over the past five years, underscoring the sector’s vulnerability.
The Insurance Regulatory and Development Authority of India (IRDAI) has mandated weekly claim updates and nodal officers to handle payouts, emphasizing swift support for affected families. As litigation intensifies—potentially involving forum non conveniens arguments and choice-of-law disputes—AXA XL and Allianz could see their exposures balloon if causation ties back to design flaws. AIG’s “Claims Promise” offers rapid interim funds (50% of its share within seven days), but complex third-party claims from the ground impact may prolong resolutions.
This saga highlights the intricate web of global reinsurance in aviation disasters, where a single event can strain even the deepest pockets. With investigations ongoing and more lawsuits likely, the full financial toll on AXA XL, Allianz, and peers remains a high-stakes watch for the industry.