LONDON--(BUSINESS WIRE)--The recent crash of the Virgin Galactic test flight and the Antares rocket explosion will add upward pressure on rates across the aviation sector, according to a new Best’s Briefing; however, the magnitude of increases will vary depending on subsector and the loss history of individual insureds.
The briefing, titled “A.M. Best Comments on Impact of Virgin Galactic Crash, Antares Rocket Explosion,” states that A.M. Best does not expect to take any actions on rated companies in response to either of these single large losses, given that aviation business is usually underwritten by diversified insurers and on a subscription basis.
A.M. Best notes there has been an unusually high incidence of aviation losses this year, which include the disappearance of Malaysia Airlines Flight MH-370, hull losses due to fighting at Tripoli airport and the downing of Malaysia Airlines Flight MH-17. The crash of the Virgin Galactic SpaceShipTwo on Oct. 31, 2014, came just days after the Orbital Sciences Antares rocket exploded after lifting off from the NASA Wallops Flight Facility on Oct. 28. If losses from the Virgin disaster are in line with current market estimates of between USD 40 million and USD 50 million, the total combined hull and liability losses for 2014 are likely to approach USD 1 billion. Industry sources have estimated the Antares rocket was insured for as much as USD 50 million.
A.M. Best believes the Virgin crash and Antares rocket explosion will support upward rate momentum through the busy November/December renewal season. However, capacity remains plentiful and will constrain the magnitude of rate increases.
To access a complimentary copy of this briefing, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=230335.
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