Aviation reinsurance rates rise by up to 250%, says report

Aviation reinsurance rates rise by up to 250%, says report
Aviation underwriters are suffering from lower premiums due to worldwide lockdowns and travel bans. (AFP/File)
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Updated 05 January 2021

Aviation reinsurance rates rise by up to 250%, says report

Aviation reinsurance rates rise by up to 250%, says report
  • Reinsurers, which share the burden of large risks with insurers in return for part of the premium, are also seeing rate rises in other sectors after years of falls

LONDON: Aviation reinsurance rates rose by up to 250 percent at the key Jan. 1 renewal date, broker Willis Re said in a report on Monday, with the market still reeling from the impact of Boeing 737 MAX crashes two years ago.

The 737 MAX resumed commercial flights in the US last week, following a 20-month safety ban after two fatal crashes in five months killed 346 people.

Insurers and reinsurers face claims from the crashes relating to hull and product liability that could amount to more than $2 billion, a large sum in a relatively small insurance sector, Willis Re International chair James Vickers told Reuters.

Aviation underwriters are also suffering from lower premiums due to worldwide lockdowns and travel bans, as insurance contracts are often negotiated based on the amount of time planes spend in the air. Reinsurers, which share the burden of large risks with insurers in return for part of the premium, are also seeing rate rises in other sectors after years of falls.

Property and casualty reinsurance premiums are up by 25-30 percent for the riskiest areas of business, the report showed.

Analysts at Jefferies said the report showed a reinsurance hard market — in which premium rates are rising — was “underway,” highlighting gains in US property, global casualty and specialty lines such as trade credit and political risk, as well as aviation.

But rates are not rising as much as reinsurers had hoped, despite the coronavirus pandemic.

Insurers have themselves benefited from higher rates this year as well as lower claims in areas such as motor, giving them a strong hand in contract negotiations, Vickers said.

“Reinsurers were feeling quite bullish and feeling, ‘this is our moment’,” Vickers said, adding that they had nevertheless “achieved at least rate stability and some rate increases.”

Vickers said the biggest disagreements between insurers and reinsurers had been about cover for cyberattacks and communicable diseases such as COVID-19. Reinsurers are largely excluding these risks from policy wordings, he said. 


Riyadh investment forum sends ‘message of optimism’ with global linkup

FII is described as an international platform for debate between global leaders, investors and innovators. In 2019, 24 investment deals worth $20 billion were announced at the event. (AFP/File Photo)
FII is described as an international platform for debate between global leaders, investors and innovators. In 2019, 24 investment deals worth $20 billion were announced at the event. (AFP/File Photo)
Updated 9 min 37 sec ago

Riyadh investment forum sends ‘message of optimism’ with global linkup

FII is described as an international platform for debate between global leaders, investors and innovators. In 2019, 24 investment deals worth $20 billion were announced at the event. (AFP/File Photo)
  • FII embraces unique high-tech format in bid to reinvent global economy

DUBAI: Olympic medalists, political leaders, Nobel laureates and global CEOs are among speakers due to take part in the fourth edition of the Future Investment Initiative (FII), a two-day event that will embrace a hybrid format for the first time when it starts on Wednesday.

Jamaican eight-time Olympic gold medalist Usain Bolt is one of the star speakers among the 150 names set to take part in the event, organized under the theme “The Neo-Renaissance.”

Travel restrictions as a result of the coronavirus pandemic mean some speakers will attend in person in Riyadh, while many others will participate virtually from hubs in New York, Paris, Beijing and Mumbai.

Other high-profile speakers announced in recent days include Sen. Matteo Renzi, former prime minister of Italy; Kevin Rudd, former Australian prime minister; Alberto Fernandez, president of Argentina; and Bruno Le Maire, French finance and economy minister.

READ MORE: FII confirms over 140 global speakers for 2021 event

FII is described as an international platform for debate between global leaders, investors and innovators. In 2019, 24 investment deals worth $20 billion were announced at the event, as the Saudi Arabian economy opened up to foreign investment.

Richard Attias, CEO of organizing body the FII Institute, told Arab News that pandemic restrictions mean the 2021 event will be “totally different” from the first editions.

“But we still need to carry a message of optimism, a message that the global economy should not stop and cannot stop. This is why we are hosting this conversation in a unique format.

“The conversation will be about the rebirth of the global economy. In fact, this rebirth will be the neo-renaissance of the global economy. I hope this renaissance will positively affect all sectors. Under the leadership of the FII Institute, speakers and participants will discuss how the investment world, the sports industry, the sustainability industry — how all these industries will be reinvented.”

Attias said that the two-day event will embrace “first time ever” conference technology, “which is bringing together all participants in a virtual world.”