Airline insurers will announce worst monthly loses since 2001
An Aon report claims that a group of airline insurers, belived to include Axa, Allianz and AIG, are about to annonce the biggest monthly losses since September of 2001 and forcing them to raise prices, Bloomberg reports.
Costs to indemnify the families of victims of the Air France crash off the coast of Brazil and the Yemeni Airbus accident in the Indian Ocean will make June the second most expensive month for the business, Aon said.
Premiums to rise
Insurance rates may rise after fatal crashes and near disasters, including the Buffalo, New York-area accident that killed 50 and Chesley “Sully” Sullenberger III’s splashdown in the Hudson River. Insurers must pay to replace lost planes and compensate the families of deceased passengers.
“With losses so far this year already above the full year average, the industry is likely to see insurance premiums rise significantly,” Aon said in the report. “This will be a bitter pill to swallow” for airlines purchasing coverage, Aon said.
Total claims for 2009 may exceed $2.2bn, 57% higher than the “long-term” annual average of $1.4bn, Aon said.
Premiums have risen 14% this year to about $416m, Aon said. Premiums on policies expiring since the end of 2008 total about $364.8m, according to the broker.
Most expensive year ever
Reuters added that the report said: "If the rest of 2009 follows the 13-year average pattern for losses, and discounting 2001, the year will be the most expensive ever seen in the airline insurance market," it said.