Insight and Intelligence on the London & International Insurance Markets 24 Apr 2018
Airbus product liability loss settled at $390mn
- 13 April 2018
The aviation market has settled a major loss relating to the grounding of faulty Airbus helicopters last year for more than $100mn less than initially feared, The Insurance Insider can reveal.
Sources said that the insurers on the Airbus product liability policy, which is led by Allianz Global Corporate & Specialty (AGCS) with a 10 percent line, agreed to pay out $390mn to settle the claim.
The positive news on the loss - which had been pencilled in by the market at $500mn - fits into a broader picture of a benign environment for major claims in product liability and airline business through 2017 and into 2018.
Other markets with sizeable lines on the Airbus programme include MGA Global Aerospace, it is understood. The programme is placed directly by Airbus via its captive with advice from Willis Towers Watson.
The favourable outcome for the market is believed to have been tied to a two-year renewal of the Airbus programme, which had otherwise looked as if it would come in for a punitive rate rise.
The latest Airbus loss stems from the grounding of Airbus's Eurocopter 225L Super Puma fleet in 2016 after the rotor blades on one of the helicopters became detached during a flight in Norway, leading to the deaths of all 13 people on board.
The helicopter was subsequently placed under a flight ban by the Norwegian civil aviation authority, while its British counterpart barred the crafts from being used for commercial flights.
The European Aviation Safety Authority lifted the temporary flight suspension on the helicopters in October 2016, citing changes made to the craft's gearbox and heightened inspection requirements. However, Airbus had already sustained substantial losses.
The claim is the second time the Airbus account has been hit with a sizeable product liability loss within the last few years.
In 2014 the manufacturer was forced to refit the doors on all of its A380 jets when it transpired there was an issue with cracking that forced a Singapore Airlines plane into an emergency landing. The issue resulted in a loss of around $200mn-$300mn.
WTW declined to comment as did Airbus.
AGCS could not immediately be reached.
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