The Air India Express plane crash in Mangalore is estimated to result in an insurance claim that could reach Rs4 billion (Dh313m, $85m) – the largest payout in Indian aviation history – according to experts.

However, industry insiders say it could take years for family members of the victims to claim compensation.

The National Aviation Company of India (Nacil) – the holding company for Air India, Indian and Air India Express – and its fleet of 134 aircraft are insured by a consortium of private insurers, led by Reliance General, along with HDFC Ergo, Bajaj Allianz and Iffco Tokio.

However, most private insurance companies pass the risk by reinsuring themselves, as was the case here with General Insurance Company (GIC), ICICI Lombard and Sumitomo participating as reinsurers.

When Emirates Business contacted Reliance General about Air India's claim policy, the spokesperson declined to comment, saying: "As a rule we don't discuss individual policy or claim details."

Sources close to the carrier, though, said Reliance General has 40 per cent direct co-insurance shares, while Bajaj Allianz, HDFC Ergo and Iffco Tokio were providing insurance to Air India at a premium of $24.3m for one year, starting September 2009. The total insurance cover stands at $8.59bn.

General Insurance Corporation, the designated reinsurer, said in media reports that it had reinsured 14 per cent of the risk of $8.59bn, while ICICI Lombard's share was three per cent. Speaking to the Economic Times newspaper in India, GIC Chairman Yogesh Lohiya said that the corporation would take a hit of about $6m due to the crash. GIC, however, has protected itself through retrocession by parking its liability with international reinsurers.

Nearly Rs1.8bn ($38.37m) of the total claim is expected to go to family members of the 158 passengers who perished in Saturday's crash.

The incident was the first major plane accident in India on an international route since the ratification of the Montreal Convention in 1999. The treaty lays down the guidelines and compensation standards for passengers in an international plane accident. The Air India Express flight was operating on the Dubai-Mangalore route.

According to the Carriage by Air Act of 1972, the minimum compensation for death of each passenger on both domestic and international routes was Rs750,000. When the Montreal Convention came into effect, compensation on international routes was set at about Rs7m.