The crash of Asiana Flight 214 in San Francisco should not impact aviation insurance rates, which means the soft market should continue unabated, say experts.
While the investigation into the accident remains preliminary it appears the cause of the crash was not mechanical. That is significant because a mechanical issue would have affected the entire fleet of 777s in service today–which could have translated into rate increases while the issue remained unresolved, Howard Mills, director and chief advisor for Insurance Industry Group at Deloitte Services, tells PC360.
The CEO of Willis Aerospace, Phil Smaje, says that while the firm could not comment on the incident itself, “it is unlikely that a single catastrophic event on this scale will have a material impact on premium pricing.”
Reports yesterday identified Willis as the lead insurance broker on the account.
The aviation insurance market has been soft for the past couple of years as more capital has flowed into a marketplace with below average accident and death rates over that period. Last year alone there were 39 incidents compared to the average of 70 for a 17-year period, and the number of deaths was 318, compared to the average of 597.
Mills says the one factor that would have significant impact on rates is an increase in accidents and fatalities. The Asiana crash is the most significant in the United States this year and the first fatal crash of a major airline since Continental Flight 3407 to Buffalo, N.Y., in 2009 took 50 lives.
Smaje says, “At this point, it is difficult to see how a single catastrophic event could reverse this prolonged period of rate softening.”
Yesterday, the National Transportation Safety Board revealed two flight attendants were sucked out of the rear of the plane on impact and later found injured on the runway. Officials also say interviews with the pilots indicate the automatic throttle controls that manage the plane's speed may not have been set properly.
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