U.S. Aircraft Insurance Unaffected by Malaysia Crashes
Despite an estimated $535 million overage in aviation insurance claims this year stemming from the recent spate of foreign airline accidents (including two fatal crashes involving Malaysia Airlines Boeing 777s), Corporate Aviation Insurance Group president Matt Drummelsmith doesn’t expect any effect on insurance premiums for U.S.-based aircraft operators.
“Typically speaking, insurance carriers will raise their rates across the board to make up for significant losses, which could mean passing on rate increases to those who have impeccable safety records and no claims,” he said. “However, there are two key points to consider. Of the two major airline accidents, one has already been determined to be an act of terrorism. Therefore, its claim payment comes from a separate fund, which doesn’t necessarily affect the insurance carriers directly. Second, both airline accidents happened outside the U.S. to non-U.S. policyholders, which drastically reduces, if not completely eliminates, any U.S. insurance carrier’s liability.”
According to Drummelsmith, U.S. aircraft operators and the majority of their reinsurers “have dodged major bullets” in terms of any effect on U.S. policyholders. “Although the aviation insurance marketplace has suffered a sizable blow in claims paid, it won’t directly affect the U.S. market, thus keeping your rates in line with expectation,” he concluded.