Virgin Atlantic prices up around 10% in first indicator of airline all-risks market shift

By Michael Jones

March 7 - (The Insurer) - Virgin Atlantic’s Axa XL-led airline all-risks cover has priced up around 10% in the first sign of the market shifting in response to recent large losses, three senior aviation sources told The Insurer.

The Virgin Atlantic account is brokered by Marsh and was previously placed with AIG.

Three senior aviation sources said that AIG intended to push for rate increases of 25% to 30%. However, the placement lead changed to Axa XL, which offered a rate increase of around 10%.

Virgin Atlantic’s rate increase looks to be the first sign that the mood in the airline all-risks market is changing, said one airline broker.

The market has suffered a number of large losses since the Jeju Air disaster in late December. Last month this publication reported that liability claims had likely already surpassed the $1.6 billion in net annual premiums taken in by the market.

One airline broking source said the increase offered by Axa XL would be typical of renewals seen this year, but another said it was too early to gauge how the market will respond.

One factor the aviation market has pointed towards as necessary for a shift from the current buyers’ market is the withdrawal of capacity. Two broking sources estimated that deployable capacity sits at around 250% of actual deployed capacity.

The first significant withdrawal occurred late last month with the news that Swiss Re is exiting its primary aviation business written through Swiss Re Corporate Solutions.

However, two senior aviation market sources expressed doubt that Swiss Re’s withdrawal by itself would be enough to substantively shift the market.

One underwriting source affirmed that the market would require further capacity withdrawals if rate increases are to become either larger or more commonplace when the bulk of renewals take place later this year.

Axa XL, Marsh and AIG declined to comment. Virgin Atlantic did not immediately respond to a request for comment.