By Michael Jones

June 20 - (The Insurer) - Airline all-risk rate increases are expected to hold at around 10% following the Air India crash with supply-demand dynamics maintaining the longstanding buyers' market, three senior aviation market sources told The Insurer.

The London-bound Air India jet crashed minutes after taking off from India's western city of Ahmedabad on June 12, killing at least 270 people.

This publication reported that AIG leads the reinsurance program for Air India, with two senior aviation market sources stating that the plane's hull has an insured value of $80 million.

Some preliminary estimates for insured losses have begun to filter through into the market. GIC Re chairman and managing director Ramaswamy Narayanan told Bloomberg that insured losses could total $475 million, while GlobalData said losses are anticipated to cost the insurance industry more than $200 million. GIC Re did not respond to request for comment.

Two senior aviation broking market sources told The Insurer that insured losses could total as much as $500 million, although they clarified that any estimate remains highly provisional at this stage.

One senior aviation broking source said the Air India crash would take airline insured losses well past annual premium levels of around $1.5 billion to $1.6 billion. The source clarified that this mark had already been exceeded by February.

Since January's American Airlines crash, airline all-risk placements have broadly renewed with rate increases of around 10%. Three aviation market sources said they expect increases to remain around this level, albeit one senior underwriting source said that given the circumstances larger increases could occur.

One senior aviation broking source said there was too much capacity in the market for insurers to be able to meaningfully move the dial on pricing. They added that the Air India loss may help to maintain rate increases at around 10%.

Aviation market sources previously suggested that capacity withdrawals would be necessary for a shift from the current buyers’ market. Two broking sources estimated that deployable capacity sits at around 250% of actual deployed capacity.

Aside from Swiss Re's withdrawal from direct aviation in February, multiple senior market sources said they have not seen evidence that others are set to withdraw at this stage. One broking source told The Insurer they nonetheless continue to expect withdrawals will happen at some point.

A few bellwether airline accounts are up for renewal in July before the bulk of the market renews in the fourth quarter.