Aviation insurers are concerned by the lack of progress made in settling a manufacturer’s liability loss stemming from design flaws with the Trent 1000 jet engine, The Insurance Insider can reveal.
Market sources said claims on the aerospace insurance policy – which has a $500mn limit split over multiple years – are no nearer being settled than they were in early 2018 and that relationships between the engineering giant and its insurers had deteriorated.
The policy is led by Global Aerospace and brokered by Marsh. A number of London market insurers are known to be on risk.
The lack of final loss quantum certainty has caused consternation for insurers as they reel from at least $1bn of claims related to the worldwide grounding of Boeing 737 Max aircraft.
Concerns that Rolls-Royce senior management may have previously known about potential defects with the Trent 1000 engine have slowed up progress in dealing with claims, according to sources.
One source said lawyers were “combing through” emails at the engineering giant to determine if this was the case – a form of pre-litigation preparation commonly known as e-discovery.
Despite a continued dispute between Rolls-Royce and its insurers, The Insurance Insider understands that the Derby-headquartered company has approached London market insurers and asked them to sign non-disclosure agreements relating to the renewal of its liability insurance policy.
Rolls-Royce’s manufacturer’s liability policy is split across two years and incepts on 1 November.
Aviation sources told this publication they were concerned that the engineering giant appeared to be gearing up for a policy renewal without first offering a clearer final quantum for claims emanating from the Trent 1000 engineering issues.
“If they expect to get reasonable pricing from the market in the current situation they have another thing coming,” a source said.
Other sources noted that, without first settling the Trent 1000 claims, Rolls-Royce would be hit with a major rate hike or struggle to get cover placed.
The problems with the jet engine are understood to stretch back to 2016, when Japanese airline All Nippon Airways discovered the turbine blades in engines on its in-service aircraft were corroding faster than expected.
Blades in the intermediate pressure compressor of the jet engine were found to vibrate when operating at high speed in certain conditions, potentially causing metal fatigue.
In response to the issue, Rolls-Royce said it would monitor the Trent 100 engines currently flying and has announced a timetable for repairs that are set to take place until 2022.
The Trent 1000 engine makes up 11 percent of Rolls-Royce’s global fleet and is used to power Boeing’s 787 Dreamliner aircraft.
In February this year the engineering giant announced that it expected the Trent 1000 programme to result in a cash cost of about £1.5bn ($1.82bn).
Global Aerospace and Marsh did not respond to a request for comment.
A Rolls-Royce spokesperson declined to comment.