Air crash puts pressure on aviation insurance | Independent Newspapers Limited
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Air crash puts pressure on aviation insurance

Posted: Apr 9, 2015 at 12:57 am   /   by   /   comments (0)

A.M. Best Company has alarmed that the recent Germanwings loss may put further pressure on the beleaguered aviation war sector especially as premium rates for this business rose in 2014 in response to claims activity.

A Germanwings Airbus A320 plane Flight 4U 9525 crashed on March 24, in the French Alps on route from Barcelona to Düsseldorf. There were 150 people on board the plane, the majority citizens of Spain and Germany. All were killed when the plane crashed.

Due to the losses recorded in 2014, there was an uptick in rates in the fourth quarter of the year, when the majority of major airline and war policies renew.

Commenting on impact of Germanwings Plane Crash on aviation insurance market, the rating agency explained that the total insurance loss will comprise passenger liability claims and physical damage to the aircraft.

According to A.M. Best, passenger liability claims will be covered as part of aviation “all risks” policies and will represent the majority of the overall loss, adding that the level of liability costs are uncertain but will be linked to the nationality, earning potential and family status of the passengers and crew.

“There is more certainty around the ultimate cost of physical damage. The aircraft is valued at $6.5 million. Early assumptions have indicated that the cause of the crash may be the result of deliberate pilot action. If this is correct, the insurers that underwrote the airline’s hull war policy, rather than its all risks policy, are likely to be liable.

This loss follows a series of high-profile aviation losses in 2014, notably the disappearance of Malaysia Airlines Flight MH-370, hull claims due to fighting at Tripoli airport and the downing of Malaysia Airlines Flight MH-17. A.M. Best noted there has been an unusually high incidence of aviation losses in its briefing “A.M. Best Comments on Impact of Virgin Galactic Crash, Antares Explosion”, published Nov. 5, 2014.