Insurance Blog

By now it’s old news that pilots of a Northwest flight that overshot its Minneapolis destination by 150 miles a week ago were looking at their laptops. Yesterday the Federal Aviation Administration (FAA) said it had revoked the licenses of the pilots. They have 10 days to appeal the decision to the National Transportation Safety Board (NTSB). According to a Wall Street Journal article, federal safety rules prohibit laptops in cockpits below 10,000 feet, but allow them during cruise. However, it cited a statement from Delta (now merged with Northwest) that the airline expressly forbids pilots from using laptops at any time or engaging in personal activity that could distract from flight duties. Just a few weeks ago the U.S. Department of Transport held a Distracted Driving summit which highlighted the growing dangers of driving while distracted by texting or cellphone use. The Northwest incident underscores the point that whether […]

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The high value of losses and fatalities in the aviation sector has driven the airline insurance market into a far harder position so far this year, according to Aon’s Airline Insurance Market Indicators 2009/10 report. Lead hull and liability premium rose on average by nearly 20 percent between January and July 2009, and there is little sign that the position will improve during the final quarter when the majority of airline premium is placed. Despite the market hardening, as a result of the high level of claims, 2009 is likely to be the third consecutive year with little or no profit for underwriters. This means there will be significant pressure to increase prices further, Aon notes. It estimates that the cost of premium is likely to rise by at least a fifth for the rest of the year and into 2010. From a claims point of view 2009 is set to be […]

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Airline insurance programs saw an average premium increase of more than 20 percent in July bringing the average increase for the year so far to 17 percent, according to Aon’s August 2009 Airline Insurance Market News. That said, Aon notes that the average is somewhat inflated by the renewal of a U.S. program that had a fatal loss earlier in the year. Without that, the average increase in lead hull and liability premium would only be 14 percent so far this year. Irrespective of the specifics, the current conditions are clearly a significant turnaround compared to 2006 and 2007, when prices in the airline insurance markets declined by more than 10 percent each year. Despite only one major loss since June, 2009 still looks set to be very expensive from a claims point of view, according to Aon. Overall losses (including minor losses) have cost aviation insurers $1.66 billion so […]

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Total claims for aviation insurers are likely to be significantly higher than the average by year-end, even if there are no further major accidents, according to Aon’s July 2009 Airline Insurance Market News. With just over half of 2009 gone, claims including an estimate for minor losses are already around 11 percent higher than the average for a full year. Overall losses (including minor losses) have cost aviation insurers $1.59 billion so far in 2009, compared to $715 million in 2008. Aon projects that total claims for the year could exceed $2.2 billion, nearly 60 percent higher than the long term average of $1.4 billion. With the Air France and Yemeni losses, June looks set to be the most expensive month in the aviation insurance market since September 2001. “In an already hardening market, this means price rises are likely to be universal for the rest of 2009,” Aon notes. […]

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Sighting of debris in the Atlantic Ocean 400 miles off the coast of Brazil yesterday confirmed the crash of the Airbus A330-200 operated by Air France with 228 passengers and crew on board. The plane was en route from Rio de Janeiro to Paris when it went missing in the early hours of June 1 while flying through thunderstorms and heavy turbulence. According to latest reports, automatic messages indicating an electrical fault were sent some four hours into the flight and Brazilian authorities also reported that messages indicated a loss of cabin pressure. As the investigation into the cause of crash gets underway, industry commentators say it is too soon to say how the incident would impact the aviation insurance market. A June 1 Business Insurance article by Zack Phillips reports that the hull of the aircraft is insured for around $100 million. A May 2009 aviation market update from Aon […]

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As investigators begin the task of determining what caused the crash of a turboprop regional aircraft in a Buffalo, New York suburb late yesterday, it seems that weather conditions, rather than birds may have played a role. The plane, a Continental Connection flight operated by Colgan Air, was en route from Newark, New Jersey to Buffalo with 49 people on board when it crashed into a house in the Buffalo suburb of Clarence Center. According to latest reports, the total death toll from the crash is thought to be 50, including one person on the ground. The incident comes just a month after the emergency landing of a US Airways Airbus A-320 into New York City’s Hudson River in which 155 people escaped. Despite these two aviation accidents, it’s important to note the strong safety record of the U.S. commercial aviation industry. The number of commercial aviation accidents on scheduled flights with […]

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