Aviation insurance could get more expensive in the coming months, thanks in part, to the recent crash of the Virgin Galactic test flight and the NASA Antares rocket explosion A.M. Best concluded in a new briefing.
A.M. Best said that each event won’t push rates higher on its on. Rather, they add to “unusually high incidents of aviation losses this year,” including the disappearance of Malaysia Airlines Flight MH-370, hull losses due to fighting at Tripoli airport in Libya, and the downing of Malaysia Airlines Flight MH-17.
That said, the insured losses from both the Virgin Galactic crash on Oct. 31 and the NASA Antares rocket crash on Oct. 28 are not insubstantial. The Virgin Galactic crash had insured losses of between $40 million and $50 million, according to current market estimates cited by A.M. Best. Antares was insured for as much as $50 million, according to industry sources cited by the briefing.
In all, total combined hull and liability losses for 2014 will come close to $1 billion, A.M. Best said.
While A.M. Best said that capacity in the sector remains substantial and will help limit the magnitude of rate increases, the ratings entity still sees the Virgin crash and Antares rocket explosion as being the final triggers that support some upward rate momentum.
Source: A.M. Best