Airline war risk insurance expected to rise due to global conflicts

Monday, 28 July 2014 00:00 - - {{hitsCtrl.values.hits}}

Reuters: Insurers are expected to hike war risk premiums for airlines following losses due to global conflicts, including the downing of a Malaysia airplane over Ukraine, insurance rating agency A.M. Best Company said last week. The insurance settlement of the Malaysian airliner, which was shot down by a ground-to-air missile, is expected to be complex and lengthy. The claims would be both for the loss of the aircraft and passenger liability.

The ratings agency said that Lloyd’s Syndicate 609, which is managed by Atrium Underwriters Ltd, has confirmed that it is the leader of the hull war policy for Malaysia Airlines. War risk hull is used in shipping and aviation industries to cover damages and is calculated based on the value of the craft. A.M. Best Company said that the syndicate and its co-insurers have agreed to settle the hull war aspect of the loss, and have instigated collection of funds. Barclays bank in a research note last week said that if reports that the plane was shot down are verified, the aircraft loss will be borne by the niche aviation war market, which has recently been pummelled by a series of losses. In an exclusive interview with Reuters on Wednesday, Alexander Khodakovsky, Ukrainian rebel and commander of the Vostok Battalion, confirmed that pro-Russian separatists had an anti-aircraft missile of the type Washington says was used to shoot down Malaysia Airlines flight MH-17 and it could have originated in Russia. Khodakovsky blamed the Kiev authorities for provoking what may have been the missile strike that destroyed the doomed airliner, saying Kiev had deliberately launched air strikes in the area, knowing the missiles were in place.

Flying is still safe, assures IATA chief

The International Air Transport Association (IATA) has assured air travellers that despite the recent plane tragedies, flying still remained safe.

Referring to the tragedies involving the Malaysian plane over Ukraine; the TransAsia plane in Taiwan and the Air Algerie plane in Mali, IATA CEO and director general Tony Tyler said: “This has been a very sad week for everyone involved with aviation. Our heartfelt sorrow goes to all those who have lost their lives in these tragedies. And the industry’s thoughts and prayers are with their families and loved ones. “Every accident is one too many. The greatest respect that we can pay to the memory of those involved is to leave nothing unturned in our quest to understand the cause and to take steps to ensure that it is not repeated,” he said. With three tragedies in such quick succession, many people will, understandably, be asking questions about aviation safety. “Our number one priority is safety. And despite the events of the past seven days, flying is safe,” he said. Every day, approximately 100,000 flights take to the sky and land without incident. In 2013 more than three billion people flew and there were 210 fatalities. Regrettably, we have surpassed that number already this year. But even so, getting on an aircraft is still among the safest activities that one can do, he said. “Safeguarding our customers from harm as we transport them around the world is core to the mission of the aviation industry. It has been that way throughout our development over the last century. And we continue to do everything in our power to make flying ever safer,” Taylor added.