AJG: Ethiopian Airlines / Boeing crash to cost insurers over $1bn
The Ethiopian Airlines crash on the 10 March 2019, and the subsequent worldwide grounding of the Boeing 737 Max fleet, “could cost aviation insurers over $1bn combined”, the broker AJ Gallagher has estimated.
Loss activity in the sector, more broadly, was significant in Q2 as insurers “suffered further high-profile and expensive losses, across the airline, aerospace and general aviation sectors”, the broker said.
Aviation insurers remain concerned that “despite upwards rating movement, 2019 is poised to become yet another loss making year”, AJG said in its aviation insurance market update, Plane Talking.
The broker highlighted the Aeroflot Sukhoi Superjet 100 crash in May 2019, which caught fire while landing at Moscow’s Sheremetyevo International Airport, killing 41 people. Thirty-seven passengers survived. “The cause of the crash, the second fatal accident involving the Superjet since it went into service, has not yet been established, but the hull and liability claim is likely to be substantial,” it said.
The broker also pointed to the Biman Bangladesh Dash 8 Q400 ‘hard landing’ in Myanmar, on 8 May 2019, and the Miami Air International Boeing 737-800, which skidded off the runway into a Florida river on 4 May 2019. It said both incidents “must be considered remarkably close calls, given the extent of damage each aircraft sustained and the fact that together they were carrying over 170 passengers and crew”.
However, major claims are “only one element” of overall loss as smaller and more frequent ‘attritional’ claims work against the rise in premium, subduing income.
Pointing to the impact of attritional losses, AJG said: “The smaller partial and attritional claims remain ever frequent and we continue to see overruns, bumps and scrapes that regularly lead to significant repair claims and costly constructive total losses. Together these everyday events account for a significant portion of the annual market claims figure and as such remain the key area of concern amongst aviation insurers.”
It said that other sectors of the aviation industry “also continue to experience losses and add pressure on underwriters”. Incidents include the crash of a corporate jet in Mexico in which 11 passengers died, a mid-air collision of two floatplanes in Alaska which killed six people, the crash of a light aircraft in Brazil, killing all three people onboard, among them a Brazilian popstar, and a jet that was destroyed after hitting a hangar during takeoff, resulting in ten fatalities and third party damages. “While it is too early to suggest reserves for these losses, it is estimated that they will produce some substantial hull and liability insurance claims.”
Insurers are still estimating the cost of earthquake damage at Clark International Airport in the Philippines, while the ongoing grounding of the Boeing 737 Max fleet “could end up being the largest ever non-war claim the aviation market has incurred”.
The broker concluded: “Coming against the backdrop of a bad year in 2018, and a poor first quarter, these recent losses will continue to spur underwriters to remain disciplined as the year progresses. The market is finely balanced and further major losses in the coming months could lead underwriters to react more strongly.”
Get all the latest re/insurance industry news with our daily newsletter - sign up here.
More of today's news
Run-off specialist DARAG strikes reinsurance deal with Scandinavian insurer Protector
The move is a part of company's long-term growth strategy in the Scandinavian market.
Lloyd’s re/insurer Apollo taps Fidelis chair to build underwriting strategy
'The role has been created as a result of the growth in size and the variety of classes written and planned in the future,' says CEO.
BP Marsh acquires AU$1.47m stake in Australian firm Agri Services
BP Marsh believes Agri is capable of becoming a serious market player over the next 5 years.
Gallagher appoints new UK employee benefits CEO following "transformational growth"
The executive has previously been the CEO of PIFC Group, Bluefin Corporate Consulting and Capita Employee Solutions.
Willis Towers Watson appoints new head of North American construction
He will oversee the insurance brokerage offerings aimed at contractors, project owners, developers, architects and engineers.
Save £600 with the Intelligent InsurTECH Europe Super Early-Bird rate: Book now
Already registered?
Login to your account
If you don't have a login or your access has expired, you will need to purchase a subscription to gain access to this article, including all our online content.
For more information on individual annual subscriptions for full paid access and corporate subscription options please contact us.
To request a FREE 2-week trial subscription, please signup.
NOTE - this can take up to 48hrs to be approved.
For multi-user price options, or to check if your company has an existing subscription that we can add you to for FREE, please email Elliot Field at efield@newtonmedia.co.uk or Adrian Tapping at atapping@newtonmedia.co.uk
Editor's picks
Editor's picks
More articles
Copyright © intelligentinsurer.com 2024 | Headless Content Management with Blaze