Are insurance rates going to climb even more?

[NotarPilot]

For those that have been keeping up on the recent issues of leased airplanes on the verge of being nationalized by Russia and essentially being stolen, I’ve been reading that leasing companies may turn to their insurance companies for compensation. I think we are in uncharted waters when $13b worth of airplanes may end up having to be written off. And if the insurance companies end up paying, will that trickle down to everyone’s rates going up? I’m sure those insurance companies are different than ours but they may share the same underwriters. Maybe?

[GeeBee]

It depends on the coverage. I ran into this problem early in my aviation career when a flying club I was with had a C-T210 confiscated in Mexico. The insurance company refused to pay because there was no war risk coverage on the airplane. As a result the owner was faced with continuing to make payments, or default for an airplane he did not have in his possession. I am  guessing there might be default swaps securing the leases since Russian airlines are notoriously unstable even in good times. Alternatively, there is plenty of Russian assets the companies and debt holders can seize in the Western world to mitigate their losses with court action.  This will take years and lots of court trials. The nationalization of oil assets in Venezuela is still an ongoing legal case.  I don't think the insurance companies will take huge losses.

Oh...the C-T210? After dropping off a Federale General, it caught fire in Culiacan, burned to the mains. Don't know anything about that. 

[David Lloyd]

5 hours ago, GeeBee said:

It depends on the coverage. I ran into this problem early in my aviation career when a flying club I was with had a C-T210 confiscated in Mexico. The insurance company refused to pay because there was no war risk coverage on the airplane.

Been a long time since we were at war with Mexico.  How old was that 210? 

[Parker_Woodruff]

43 minutes ago, David Lloyd said:

Been a long time since we were at war with Mexico.  How old was that 210? 

"War risk" covers a lot more than war.  It covers things like confiscation, riots, strikes, and civil commotions.

[GeeBee]

1 hour ago, David Lloyd said:

Been a long time since we were at war with Mexico.  How old was that 210? 

It was brand new.

 

[carusoam]

Got another year to find out…

Pray for peace…

Best regards,

-a-

[GeeBee]

Excellent article by the Financial Times of London here on insurance for planes and ships

 

https://finance.yahoo.com/m/520f7996-05c4-3206-a233-805954af9f32/insurance-industry-braces-for.html

[0TreeLemur]

On 3/17/2022 at 10:10 AM, GeeBee said:

Excellent article by the Financial Times of London here on insurance for planes and ships

 

https://finance.yahoo.com/m/520f7996-05c4-3206-a233-805954af9f32/insurance-industry-braces-for.html

This article doesn't square with the common "war clause" that almost every insurance policy includes as mentioned by @Parker_Woodruff.