Insurance premiums to get costlier in bad year for aviation, say experts

It's a payout no one -- neither airliners nor passengers -- hopes would ever come to pass, but aviation insurance is set to get costlier amid rising risks and air fatalities, experts say.

- Zia Haq

NEW DELHI:

Mishaps and war have already ratcheted up the stakes, capping a dream run of low, stable premiums, which are poised to jump this year. The lumbering Russia-Ukraine conflict, a spate of air accidents and the apparent start of an Israel-Iran clash have added significantly to those risks, an industry executive said, requesting anonymity.

Earlier this month, a UK judge ruled that insurance companies must compensate aircraft lessors and airliners for planes seized by Russia as part of its counter-sanctions reprisal, adding a new dimension to aviation insurance.

The year 2025 was already beginning to prove to be a tipping point with the Potomac River mid-air collision in the US this January. It shattered the calm of 2023 when no large plane was involved in a fatal accident, according to aviation groups. The encounter between American Airlines Flight 5342 and an army helicopter near Washington was the deadliest US disaster in over a decade.

"This changed sentiments dramatically in New York and London, two financial centres where the largest aviation reinsurance businesses are concentrated," said Mathew Pannerselvam of Troth Broking Ltd.