Sep 2 1985
From The Space Library
Loss of 13 commercial aircraft hulls since January, including four wide-body transports, totaled $318 million and exceeded hull losses in any previous year, Aviation Week reported. The wide-body losses included a UTA Boeing 747-300, which burned March 1985 on the ground in Paris, an $85 million loss; an Air-India Boeing 747-200B; a Delta Air Lines Lockheed 1-1011-1; and a Japan Airlines Boeing 737-100SR. Observers expected this to result in increased airline insurance premiums, the third round of increases since heavy hull losses in 1982 and 1983 and the onset of large liability awards in U.S. courts.
Insurance officials also predicted the year's losses would narrow capacity in the insurance market, meaning airlines could negotiate for insurance, but it would be harder to get and at higher rates. Payouts from hull losses already incurred had exceeded total premiums paid plus any interest income gained from investment, although interest rates were low and produced comparatively little income.
Premium rates on a world scale averaged a 45% increase in 1984 and would probably rise another 15% in 1985. Also, the levels at which deductible insurance became effective would likely double. Most policies signed in 1984 increased the deductible from $250,000 to $500,000 for narrow-body aircraft and from $600,000 to $1 million for wide-body aircraft. This was part of a long-term trend toward airlines self-insuring for the first few million dollars of liability.
Of greatest concern to insurance officials was the rise of average settlements for passenger fatalities in the U.S., which averaged $450,000 in 1979, $650,000 in 1982, and would likely rise to between $800,000 and $1 million, the officials believed. The average settlement in the rest of the world was approximately $50,000 but varied considerably. (Av Wk, Sept 2/85, 34)
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