By Michael Jones

Jan 31 - (The Insurer) - Chubb leads the London placement for the American Airlines all-risk cover that looks set to face losses in the hundreds of millions of dollars related to Wednesday’s crash near Reagan Washington National Airport, The Insurer can reveal.

Sources said the American Airlines cover is evenly split between the North American market and the London placement. As revealed by this publication yesterday, Starr Insurance is the lead on the all-risks cover’s North American placement.

The American Airlines jet was on approach to land at Reagan airport when it collided with a military Black Hawk helicopter and crashed into the Potomac River.

American Airlines confirmed that 60 passengers and four crew members were onboard the jet.

President Trump confirmed in a statement on Thursday afternoon that there were no survivors and said the cause of the crash remains unknown.

It is understood the insured value of the jet is $5.3mn, but the vast majority of the loss will come from the liability component.

Sources said that the liability loss would likely reach into the hundreds of millions of dollars, and one source said it could possibly be double that expected from the recent Jeju Air disaster in South Korea.

All 175 passengers and four crew were killed in the Jeju Air incident, while two crew members were pulled out alive.

Earlier this month, this publication reported that preliminary market loss estimates for the crash had coalesced around $200mn to $250mn, although all-risk lead Axa XL was yet to set an official reserving figure.

Sources said one complicating factor for the American Airlines incident was the question of federal liability in the event that the military or Federal Aviation Administration were deemed at fault.

Prospective market impact

While the market response after the Jeju Air loss suggested that the market response would be muted, bar any capacity withdrawals, sources were not as emphatic in relation to the American Airlines incident.

Continued capacity oversupply in the airline all-risks market has seen the market tilt in favour of buyers for a number of renewals, with most placements during the fourth quarter of 2024 seeing leaders offer rate reductions of ~15 percent.

One broking source said that while they did not expect the American Airlines loss to halt this recent market softening, it would bring the airline all-risks market “incredibly close” to that point.

Elsewhere, an aviation market underwriter suggested this event could push certain uncertain market players over the edge. They said that all eyes would be on reserve setting by the placement leads over the next few weeks.

Aviation market sources said that the loss would very likely impact reinsurance pricing.

In its January renewals report, Howden said that risk-adjusted excess of loss rates remained stable or reduced slightly at 1 January.

WTW declined to comment. Chubb and American Airlines were approached for comment.