Royal & SunAlliance (R&SA), CGNU, Tokio Marine, Mitsui Marine, Munich Re, Zurich Insurance Company, CNA and Chubb Corporation insure the airlines involved in last week's terrorist attacks, Insurance Times can reveal.
The firms all underwrite Global Aerospace Underwriting Management, the lead insurer for American Airlines and a provider of “significant” cover for United Airlines.
The chief executive of Global Aerospace, Tony Medniuk, confirmed the group's involvement, but declined to specify the exact amount of exposure. He said the group was liable for less than 50% of American Airlines' claims – it is understood the true figure is 30%.
Reinsurer Hannover Re joined the debate by saying both American and United had coverage limits of $1.5bn (£1bn) per event.
Medniuk said: “Global Aerospace is the lead insurer for American Airlines and a significant provider of insurance to United Airlines.
“We also provide insurance to other organisations with a potential involvement in the recent tragic events in the US. This one loss will not turn our company into a loss by itself. However, the pricing of airline insurance has been far too low for too long and this is probably coming as a reminder to people of the exposures that do exist.”
He questioned the assumption that insurers should cope with liabilities of this sort and said the industry could only handle calculable risks.
“If an aircraft is taken out of the control of an airline, hijacked in this way and used as a missile, to say the airline should be held liable for that is a very big leap – but courts will decide that.
“The insurance industry needs risks it can quantify and measure. If something comes within the category where a president and prime minister say ‘We are at war', we might be moving into unquantifiable territory.”
He said it was too early to put a figure on possible claims.
Head of aviation at leading City law firm Cameron McKenna, Tim Brymer, said the eventual claims could change the state of the industry. “It's really a global problem for the market, although there will be insurers who will have avoided any exposure,” he said.
“There could be a new order now in terms of the ones that have avoided the exposure. The league tables could be affected, but saying that is speculation at the moment.”
Lloyd's chairman Sax Riley last week confirmed Lloyd's has a “substantial involvement” in both United and American Airlines, as well as with the World Trade Centre.
A spokesman for R&SA, which underwrites Global Aerospace, said the cost of claims would be shared among many insurers and reinsurers. He said: “You will not find anybody in the market with large net lines on any of these risks.”
Fellow Global underwriter CGNU is also a member of La Réunion Aérienne, a French specialist aviation insurer. It has estimated the terrorist attacks will cost it no more than £35m. Claims related to the hijacked aircraft are expected to make up less a third of the total figure.
