Record payout likely for insurance firms

Press, 26 March 1980, Page 14

Record payout likely for insurance firms

NZPA London Lloyd’s and other major London-based insurance groups face heavy losses as a result of the “Year of the DC 10.” when aviation disasters reached record levels-. The number of crashes during 1979 was actually slightly less than the previous year but the size of the disasters — including three DC 10 crashes, made the difference, it has been reported in London. "Last year produced the worst losses that British aviation insurers have known,” said the chairman of the Aviation Insurance Offices’ Association (Mr Jack Webb). The association covers the 25 main companies in the world-wide insurance business, which is centred in London. Mr Webb said that 1979 would be remembered as the year of the DCIO, although the three that crashed "were all flown by airlines whose safety record had been of the highest level.”

The last of the three was the Air New Zealand DCIO which crashed on Mount Erebus on November 28, killing 257 people. The first was in May when an engine on the wing of a DC 10 taking off from O’Hare airport, Chicago, tore away and more

than 270 were killed. The second was in Mexico City when a DCIO skidded from one runway to another. and 63 people died. The cost to insurance companies' of three DC 10s, plus 16 other major jets, is about $lOO million (about SNZ23O million). On top of that will come passenger liability and the loss of smaller aircraft. There were SSO air passengers killed, compared with 663 in 1978 and there were 92 crew deaths against 54 the year before. The “Daily Telegraph,’’ said that one of the biggest items is likely to be the cost to insurers of the dead passengers. “At this early stage,” it said, "everybody is wary of putting a figure on the ' liability, but it is likely to be well over $9O million (about SNZ2O7 million).” The total cost for last year is liable to top $260 million (about SNZ6OO million). The aviation losses came on top of bad results from other areas for 1979, including the highest ship losses in peacetime. l "Insurance experts forecast that if the rate of losses continues, reinsurance companies throughout the world could get into deep financial trouble,” the "Telegraph,” said.