American Crash Loss Assessed

The total insured monetary loss in thecrash of American Airlines flight 587 will be above a low estimateof $150 million but “conceivably less than $750 million,” accordingto Bob Bailey, chairman and chief executive officer of NYMAGICInc., one of the airline's insurers.

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The Nov. 12 flight from Kennedy Airport in New York was boundfor the Dominican Republic. Five persons on the ground and 260persons aboard the Airbus A300 perished when, minutes aftertakeoff, the plane crashed into a neighborhood in Queens, N.Y.

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Mr. Bailey heads the holding company that contains New YorkMarine & General Insurance Company, one of a dozen insurers forthe airline. The lead insurer was Associated Aviation Underwritersof Short Hills, N.J., part of London-based Global AerospaceUnderwriting Managers.

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“We dont know the [total] liability. Its guesswork at thistime,” he said, adding that information concerning the percentageof coverage his firm has is proprietary.

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The other insurers providing American with hull and liabilitycoverage through Aon Group Ltd. are: subscribing Lloyd'sunderwriters and members of the Institute of London Underwriters,along with subscribing insurance carriers including United StatesAviation Underwriters Inc., La Concorde Assurances, AssuranceFrance Aviation, AXA Global Risks U.K., Avion Assurance Ltd.,American Home Assurance Company and Legion Insurance Company.

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Peter Butler, underwriting executive for Global Aerospace, saidhe had held off new quotations for “an hour and a half” after thecrash to establish whether terrorism was involved. Underwritingbegan again the next day, he said. If terrorism had been involved,“there could have been a different reaction,” he noted, explainingthat the “pause” on Monday was not a halt in underwriting.

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Wayne Wignes, president of Americans broker, Aon Aviation inChicago, said that since Sept. 11 dramatic premium price increasesfor airlines have been underway and “increases of 200 to 400percent are not uncommon.”


Reproduced from National Underwriter Property &Casualty/Risk & Benefits Management Edition, November 19, 2001.Copyright 2001 by The National Underwriter Company in the serialpublication. All rights reserved.Copyright in this article as anindependent work may be held by the author.


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