On June 12, 2025, the crash of Air India Flight AI171 near Ahmedabad, en route to London, resulted in the tragic loss of over 240 lives and the complete destruction of a Boeing 787 Dreamliner. This incident is not just a human tragedy — it has triggered one of the largest aviation insurance payouts in Indian history, potentially exceeding Rs 1,500 crore. Beyond the numbers, this catastrophe forces every one of us to confront a fundamental and deeply personal question: Where are we truly safe? Inside a commercial aircraft? Within the walls of our homes? Walking down a neighbourhood street? This crash has proved yet again that accidents have no pattern, no warning, and no GPS. They can happen to anyone, anywhere, anytime.
Understanding this, we must stop assuming that life will go according to plan and begin preparing for when it doesn’t. Risk is not an abstract idea meant only for businesses or stock markets. It’s a very real part of our daily lives. And while we cannot always prevent accidents, we can — and should — prepare for the financial consequences they bring. That’s what risk management is truly about. Insurance, often misunderstood as an investment or tax-saving tool, is actually a financial safety net. It is a way to protect our families from being devastated twice — once by the emotional loss, and again by the financial fallout that often follows.
Let’s understand the magnitude of the AI171 insurance response. The aircraft alone was insured for Rs 650–700 crore. As per the Montreal Convention, the family of each deceased passenger is entitled to around Rs 1 crore, which could total more than Rs 240 crore in payouts. Together, the combined liability and hull damage are projected to cross Rs 1,000–1,500 crore. Tata AIG is the lead insurer, with support from major Indian firms like GIC Re, ICICI Lombard, United India, and Oriental Insurance. However, a staggering 95% of this risk has been reinsured with global giants such as AIG and AXA XL in international markets like London and Bermuda. Indian insurers retain only about 5% of the exposure — approximately Rs 50–75 crore. This clearly reflects a gap in India’s domestic insurance capacity and a broader point — the global market values and manages risk far more aggressively than we do.
This incident should force us to reconsider how we perceive the value of human life. In India, most people don’t calculate their Human Life Value (HLV) — a measure of what one’s life is financially worth to their family in terms of income, responsibilities, and future obligations. The Rs 1 crore compensation sounds substantial, but for many families, especially those with young children, housing loans, or dependent parents, it may fall short of replacing the lost earning capacity of a loved one. Sadly, most Indians still buy insurance only to save taxes or as a savings plan, completely missing its core purpose: financial protection during loss or crisis.
Internationally, the approach is different. The cost of living and medical care is higher, but so is awareness. A middle-class individual in the U.S. might have a life insurance cover of 500,000 or more. Meanwhile, in India, even among the educated and employed, coverage of Rs 50 lakh is considered “enough.” The truth is, many Indians spend more time planning for vacations and mutual fund SIPs than for their family’s financial security in case of their sudden absence. It’s time we realigned our priorities. Chasing dreams is important — but protecting them is even more critical.
If a large-scale corporate entity like Air India has insurance running into Rs 8,000–10,000 crore across its fleet and pays Rs 250 crore in premiums annually, it’s only logical for individuals to cover themselves proportionately. As individuals, here’s what we must do: assess our real financial value to our family, get term insurance equal to 10–15 times our annual income, ensure we have adequate health and accident insurance, cover our homes and properties against natural calamities and theft, build an emergency fund, and update our coverage as life progresses.
The AI171 crash is not just an aviation disaster. It is a national tragedy, a financial event, and above all, a wake-up call. No one predicted this — just like no one predicts heart attacks, accidents, fires, or job losses. But when we prepare in advance, we prevent the financial disaster that follows. Insurance cannot heal emotional wounds, but it can keep the future from falling apart completely. We must stop leaving our families’ fate to chance and start taking responsibility today. In a world where risk is unavoidable, insurance is no longer optional — it’s our most dependable defence.
(The writer is the Founder of ‘Investment Options’, an insurance and investment consultancy based in Goa since 2013, with pan-India clientele)
