While it’s too soon to know how the crash of Asiana Airlines’ Flight 214 may affect the market for airline insurance, it’s important to recognize that the loss comes at a time when the industry’s overall claims level was exceptionally low, reflecting its investment in safety.
In its latest Q2 2013 Airline Insurance Market News, Aon had reported on the extremely low level of claims the market had seen up to the beginning of May 2013. This followed a 40 percent reduction in the cost of major losses in 2012.
For the year to the beginning of May 2013, the loss figure, excluding minor losses, was $107.63 million, which while up from the $32.17 million recorded at the same point in 2012, was still some 67 percent below the five-year average, Aon said.
Adding an estimate for minor losses, the overall loss total stood at $357.63 million, compared to $282.17 million in 2012.
Passenger and third party fatality levels were extremely low, with only 23 up until the beginning of May, compared to 214 on average for the same point between 1995 and 2012, Aon added.
Major losses in 2012 totaled US$324 million, nearly 40 percentÃ‚ less than the US$522 million recorded in 2011. Adding an estimate for minor losses, the overall estimated incurred claims total was US$924 million, down 20 percent against the US$1.13 billion total claims in 2011.
Despite the low level of claims and fatalities, Aon noted:
The airline industry still represents a considerable risk where a single loss could still mean that the claims statistics for 2013 overtake the long term average. Equally, as we have seen in the past, a string of incidents at the mid-point of the year can change the position significantly.Ã¢â‚¬
Asia Insurance Review reports that the total insurance cover on the Boeing 777 aircraft owned by Asiana Airlines that crash landed at San Francisco international airport (SFO) on Saturday stands at $2.2 billion, according to the Financial Supervisory Service.
That amount includes coverage of $130 million on the aircraft hull and $3 million in crew liability coverage. Up to $2.2 billion may be paid out for facility damages and passenger casualties.
Some 291 passengers and 16 crew were on board when the aircraft crashed during its approach to the airport. The crash resulted in two fatalities and more than 180 injured.
Check out a summary of the incident by law firm Kreindler & Kreindler.
I.I.I. facts and stats on aviation are available here.