September 2014
Insurers could be hit by more than $600 million (£370 million) in aviation claims this year after both Malaysian Airlines disasters and fighting in Libya, the boss of Lloyd’s of London warned today.
Inga Beale, who joined the world’s largest insurance market in January, said the sector had suffered an “unusually high incidence” of claims with experts having already predicted that the cost of insuring aircraft will rise.
A total of 298 people, including 10 Britons, were killed when the Malaysian Airlines flight MH17 travelling from Amsterdam to Kuala Lumpur was struck by a surface-to-air missile in July.
Malaysia Airlines flight MH370 disappeared in March, and Tripoli airport was seized by rebels last month who set fire to planes and buildings.
Beale said: “The global aviation hull war market accounts for around $65 million of premium per annum; yet already in 2014, claims could exceed $600 million for the insurance industry.
"In a period when premium rates have generally fallen this is a reminder of why pricing must reflect the underlying risks which are being written.”
Despite the spectre of aviation claims, fewer natural disasters and improved investment returns helped Lloyd’s of London — founded in a coffee house in 1688 — to post a 21% jump in pre-tax profits to £1.67 billion during the first six months of 2014.
Investment income climbed to £642 million, up from £247 million in the first half of 2013, helped by higher yields in the market’s corporate bond portfolio with the market’s combined ratio coming in at 86.9%.
Ratios below 100% effectively mean an insurer is taking in more premiums than it is paying out in claims.
Lloyd’s remained tight-lipped on rumours it is planning to quit its One Lime Street building, where it has been since the Eighties. Sources close to the market have suggested Lloyd’s is eyeing a new development opposite nicknamed “the Scalpel”.
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