How much will the mid-air collision in DC cost aviation insurers?

Investigation under way after tragedy strikes

How much will the mid-air collision in DC cost aviation insurers?

Insurance News

By Josh Recamara

The total insurance loss resulting from the mid-air collision that happened near Washington D.C. on Wednesday night will comprise passenger liability claims and physical damage to the aircraft, AM Best estimates.

Passenger liability claims are typically covered under aviation "all risks" policies and are expected to represent the majority of the overall loss, the company said.

On Wednesday, a mid-air collision occurred over the Potomac River near Washington, D.C., involving an American Airlines regional jet and a US Army Black Hawk helicopter. The incident resulted in the loss of all 67 lives aboard both aircraft, marking the most fatal aviation disaster on US soil in 23 years, according to media reports.

The American Airlines flight, en route from Wichita, Kansas, to Washington, D.C., had departed approximately 93 minutes earlier. The Black Hawk helicopter was conducting a routine training exercise at the time of the collision. Initial reports indicate that both aircraft were in communication with air traffic control, and the cause of the collision is under investigation.

While the exact level of liability costs remains uncertain, AM Best said that historical data provides some context. For instance, following the Germanwings Airbus A320 crash, Lufthansa reportedly set aside $300 million for liabilities. Liability costs may vary based on factors such as the nationality, earning potential, and family status of the passengers and crew.

The ultimate financial impact will depend on the results of ongoing investigations, and the settlement process is expected to be prolonged due to potential litigation.

Largest aviation insurers

Starr International Group has the largest market share among aviation insurers in the US at 17.9%, based on AM Best data. American International Group is the second largest, with 11.4% market share, followed by Sompo Holdings US Group, with 7.6% market share.

The incident underscores the inherent risks associated with aviation operations and the critical role of insurance in mitigating financial impacts.

The aviation insurance market is expected to closely monitor the outcomes of the investigation and the subsequent claims process to assess the broader implications for the industry.

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