Aviation Market Update: Russia and Ukraine - Lessors to Pursue Claims

Property & Casualty

Aviation Market Update: Russia and Ukraine - Lessors to Pursue Claims

Uncertainty continues in the Aviation market, as Russia’s invasion of Ukraine leaves 400 leased planes, valued at $10B, on the ground at Russian airports after Moscow has blocked them from leaving1. As a result, lessors have begun to write down hundreds of millions of dollars in recent weeks while pursuing insurance claims.

However, these claims may take years to settle, and S&P Global is estimating losses anywhere from $6B to $15B. The wide range of losses stems from the number of “occurrences” or trigger events attributed to Russia’s default and will come down to specific wording in each policy.1

The world’s top aircraft lessor, AerCap, reported in early April 2022 that it had submitted a $3.5 billion insurance claim for more than 100 jets stranded in Russia, the largest exposure in the sector.

Lessors of commercial aircraft already see significant rate hikes in the cost of renewing policies out of the London market, which could trickle down to the domestic U.S. market later this year and prolong the hardening of the market. There is also concern that a claims battle could deter the appetite for risk in general.

Insurance Journal: https://amp-insurancejournal-com.cdn.ampproject.org/c/s/amp.insurancejournal.com/news/international/2022/05/11/667129.htm

Aviation Team