Starr leads ~$38mn all-risks cover for Air Busan plane fire

By Michael Jones

Jan 29 - (The Insurer) - Starr Insurance leads the ~$38mn airline all-risks cover for the Air Busan plane that caught fire at Gimhae International Airport on Tuesday, The Insurer can reveal.

Sources said the cover was brokered by Arthur J Gallagher, with the aircraft’s hull insured for $38mn including the total loss-only insurance.

It is understood the cover also includes additional cost of working cover. Sources said this is either valued at $2.5mn or $5mn.

The Airbus aircraft caught fire on 28 January at Gimhae International Airport just before 10.30 pm local time. It is unclear what caused the fire but local reports say it began inside the aircraft.

All 169 passengers and seven crew members were evacuated, with three sustaining minor injuries, Busan fire authorities reported.

Sources said the aircraft is expected to be a total loss. Footage from local broadcaster Yonhap showed damage along the entire length of the fuselage roof.

The fire comes a month after South Korea suffered its worst-ever air disaster when a Jeju Airlines-operated Boeing 737-800 smashed into a wall after crash landing at Muan International Airport.

All 175 passengers and four crew were killed in the incident. Two crew members were pulled out alive.

A statement by the South Korean Financial Services Commission issued on 29 December said that the overall insured limit for the aircraft is $1.037bn, with the compensation limit for liability coverage accounting for $1bn of that.

Axa XL is the lead reinsurer on the airline all-risks cover for Jeju Air, with a 15 percent line on the program.

Sources said that Convex has a 9.5 percent line on the program, while Nexus, Elseco and Helvetia also have line sizes in the high single digits.

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.

Aviation market sources said that the Jeju Air crash was unlikely to have any effect on the market unless it caused capacity to withdraw. It is understood the Air Busan event is unlikely to change this.

Gallagher declined to comment. Starr Insurance and Air Busan were approached for comment.