All material subject to strictly enforced copyright laws. © 2022 Insurance Insider is part of Euromoney Institutional Investor PLC.
Accessibility | Terms & Conditions | Privacy Policy | Modern Slavery Act | Cookies | Subscription Terms & Conditions

Aviation market expects $130mn Air China loss

Airplanes at Vancouver International Airport

The aviation insurance market is anticipating a loss of about $130mn after an A330-300 caught fire at a Beijing airport last month, The Insurance Insider can reveal.

Market sources told this publication that the claim would be absorbed by the insurance programme of the Civil Aviation Administration of China (CAAC), which is brokered by Willis Towers Watson and Marsh-JLT Specialty.

The Air China aircraft, which was scheduled to fly to Tokyo’s Haneda airport, burst into flames while on stand.

All crew and passengers were safely evacuated but sources said the jet was likely a total loss.

The fire caused significant internal and external damage to the aircraft, with the cockpit, forward cabin and galley, and forward upper fuselage badly affected.

According to aviation news website FlightGlobal, CAAC had indicated that pumps, plastic furniture and other goods were being carried in the hold of the aircraft. There is no suggestion that lithium batteries or other dangerous items were on board.

Sources told The Insurance Insider that the claim would feature prominently in the renewal discussions for CAAC’s insurance programme, which has a 1 December inception date.

The CAAC has the biggest airline insurance contract in the world by fleet value and purchases cover on behalf of all Chinese commercial airlines. CAAC has a total fleet of about 400 aircraft.

Capacity for CAAC’s insurance programme is provided largely by domestic Chinese markets Ping An and PIIC, which then purchase substantial reinsurance cover from international markets.

The A330 fire is the latest claim to hit the aviation market at a time when the sector is gearing up towards its busy fourth-quarter renewal season. Many of the world’s largest airlines and flag carriers renew their insurance programmes in the last two months of the year.

This year’s airline insurance renewal comes as the market grapples with the disruption caused by the launch of new broking operations McGill & Partners and BGC Insurance Group.

Market sources canvassed in recent weeks by The Insurance Insider said they expected that some accounts at the crucial November renewal would be harder to place because of the number of senior brokers currently in the garden.

However, most major account moves are expected to occur once this year's negotiations are concluded.

The aviation market has had a claims-heavy year, following all-risks losses including the $43mn loss of an Amazon delivery jet in February and Ethiopian Airlines Flight 302 in March.

Loss exposure from liability claims relating to the grounding of Boeing 737 Max jets since March is also expected to hit at least $1bn. This is likely to more than erode the aviation insurance market’s total 2019 premium pot.

Air China, CAAC and Marsh-JLT did not respond to a request for comment.

WTW declined to comment.

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree