Airlines can expect at least a 40% hike and higher for aviation war coverage, as they approach their renewals, in the wake of the Israel-Hamas conflict, according to brokers.
Commercial airlines operating in and out of Israel and Lebanon can expect to be charged additional premiums, as aviation war risk insurers react to the ongoing crisis in the region.
Many brokers say commercial airlines can expect continued rate increases for hull war and excess liability in the fourth quarter, as they enter their renewals.
75% of airlines renew their insurance programmes in the final quarter of the year according to Business Insurance.
Many airlines have cancelled or suspended their flights in and out of Israel since the conflict started.
Additional premiums will depend on both the frequency of flights and whether the airline in question has scheduled flights going to Tel Aviv and whether these flights are humanitarian or purely commercial, said Edward Bond, partner of Aviation and Aerospace at McGill and Partners speaking to Business Insurance.
Despite these additional premiums, many brokers believe that insurers still have an appetite to write war risk coverage.
“Risk profile is heightened so underwriters are looking to charge additional rate to assume that additional risk”, said Garrett Hanrahan global aviation leader at Marsh.
War risk policies contain a seven-day notice clause that allows insurers to amend or cancel cover and review rates or terms and conditions in event of a major conflict.
At the start of 2023, there was an estimated $325m to $380m of worldwide premium in the aviation hull market. Yet, in April of this year, in the wake of the attacks on Khartoum airport, which saw seven commercial aircraft destroyed, the market suffered an estimated $300 million plus loss.