Guy Carpenter published a new report highlighting emerging risks facing the (re)insurance sector, including cyber risk, climate change and space risk. The report seeks to identify pressing emerging risks confronting the sector, as well as analyze their implications on businesses and (re)insurers.
Posts Tagged ‘aviation’
At the July 1, 2012, renewal, the major risk sector of the aviation reinsurance market showed a reduction on pricing of 3 percent to 5 percent on a “like for like” exposure basis. Renewals with increased exposure saw pricing in a range of flat to a small increase. The major risk sector includes airline and aerospace covers.
July 1 Reinsurance Renewals Reveal Plentiful Capacity amid Benign Catastrophe Activity, According to Guy Carpenter
2011 was a relatively quiet loss year for the global aviation sector. The airline sector did not experience any major losses involving significant loss of life. British Airways and Iberia merged to form International Airline Group (IAG), one of the largest airline groups in the world.
At July 1, the major risk (airline and manufacturing) sector of the aviation reinsurance market showed stable pricing on a ‘like for like’ exposure basis. Most renewals either quoted or ordered as-before pricing, with similar levels expected for those who had yet to enter the market. This occurred against a back drop of a direct market where soft conditions continued to prevail, with a trend towards rate reductions. Premium levels had been stable through post recession fleet and passenger growth. Although the aviation excess of loss market had not sustained any significant loss since the middle of 2010, reinsurers did not appear to be willing to give any reductions in view of the positive rating environment in other reinsurance lines and the recent occurrence of natural catastrophes.
With continuing reductions in the direct airline market and capacity in excess of 200 percent, primary insurance rates will continue to drop in 2011. This will lead to more pressure on the reinsurance market to offer reductions, except in the event of a major incident or a substantial drop in capacity.
Plane Crash, Tripoli, Libya: An Afriqiyah Airways plane carrying 104 passengers and crew on an international flight crashed as it attempted to land at Tripoli International Airport on May 12, killing all but one person on board. Afriqiyah Airways said Flight 8U771 was carrying 93 passengers and 11 crew. The sole survivor, a child reported to be Dutch, is being treated in a hospital. The Airbus A330-200 was flying from Johannesburg in South Africa to the Libyan capital when it crashed just short of the runway around 06:00 local time (04:00 UTC) after a nine hour flight, the airline said. Eyewitnesses said the aircraft started to break up as it came in to land in clear weather before totally disintegrating. Two flight recorders have been recovered and an investigation has been launched into the cause of the crash. Market sources quoted by Insurance Day said the aircraft had an insured value of USD123 million on a policy led by Catlin. Insurance Day added Afriqiyah Airways is thought to have a liability policy with a USD1 billion limit.
Explosion and Fire at Offshore Oil Rig, Gulf of Mexico: An explosion and large fire on an oil rig in the Gulf of Mexico left 11 workers missing and 17 others injured on April 20. The blaze on the Deepwater Horizon drilling rig, which broke out around 22:00 local time (03:00 UTC on April 21), sent flames and smoke high into the sky about 40 miles off the coast of Louisiana. Seventeen workers were injured, three critically, and the 11 missing men are now feared dead. Reports said the rig, which is owned by Transocean Ltd, was under contract to the oil giant BP at a cost of USD533,000 (EUR395,000) a day and doing exploratory drilling. The rig was listing badly as it was consumed by flames and it eventually sunk on April 22, leaking oil into the Gulf of Mexico. The well is currently leaking oil at a rate of about 1,000 barrels per day. Reports said the rig was built in 2001 in South Korea at a cost of about USD350 million. Transocean said the 400-by-250-foot (120-by-80 meter) rig was located around 42 miles offshore Venice, Louisiana, on Mississippi Canyon block 252.
Traditionally, insurance coverage for supply chain disruption has required physical damage to the insured’s assets to trigger a claim. However, following ongoing air traffic disruption caused by the eruption of Iceland’s Eyjafjallajökull volcano, as well as industrial action in key transport sectors and civil unrest overseas, Guy Carpenter sister company Marsh has seen increased interest from organizations wanting supply chain insurance that includes coverage for losses from non-physical damage.